India's efforts to dissuade its two major trading partners from setting up such a panel have thus failed, despite the strong protest registered by India's ambassador to the WTO, S Narayanan, at the WTO Dispute Settlement Body (DSB) meeting in Geneva on October 23, 2000.

The panel has been constituted disregarding the WTO General Council chairman's statement on December 17, 1999, requesting members to exercise due restraint on issues relating to trade-related investment measures (TRIMs) and the specific decision taken by him on May 8, 2000, on TRIMs' transition period matters.

During the DSB meeting called to consider `India - Measures Affecting the Automotive Sector' dated October 15, 2000, Mr Narayanan clarified that India's measures were in no way `inconsistent' with its obligations under Article 4 of the TRIMs Agreement.p``It was extremely unfortunate that even while the WTO members were considering resolution of developing country concerns on Continued on Page 11WTO sets up panel to examine India's auto policy TRIMs, the EC should be requesting for the establishment of a panel on the very same issue,'' he said, maintaining that India is not in a position to accept the EC request.

``We have also indicated that many developing countries' efforts to achieve even a minimum degree of industrialisation are being challenged on the basis of the provisions of the TRIMs agreement. This is undoubtedly a major issue which needs to be tackled separately in the context of the on-going review of the agreement,'' he said.

Under the TRIMs agreement, all the developing countries are given a transition period of five years to eliminate all TRIMs maintained by them for balance of payments (BOP) reasons.

India, commerce ministry officials say, does not maintain any WTO-inconsistent TRIM and is therefore unlikely to seek a further extension of the transition period from January this year to implement the agreement.

The officials explain that India's auto policy is not a TRIM, nor has it been notified as a TRIM to the WTO, adding that it is a measure taken under the BOP cover and like all such measures, it is to go by March 31, 2001, when the process of dismantling quantitative restrictions on the remaining 715 tariff lines is completed.

India has been allowing imports of SKD/CKD kits/components under the automotive policy that seeks to attract foreign direct investment in the sector. Foreign auto companies keen to set up shop in India have to maintain foreign exchange neutrality over the entire period of memorandum of understanding to be signed between them and the director-general of foreign trade (DGFT).