Uses of a class like Inner, below, are not parameterized types (per JLS 4.5).

class Outer<T> {
  abstract class Inner { abstract T get(); }

  static <X> X unwrap(Outer<X>.Inner i) { return i.get(); }

  static void test(Outer<String>.Inner i) {
    unwrap(i).substring(3);
  }

}

But, clearly, subtype inference should treat it just like a parameterized type. The rules in 18.2.3 should be modified to allow, e.g., x=String to be inferred above.