The WTO dispute settlement panel has held that the tariffs levied by India of up to 20% on various electronics and technology are in violation of international trading rules
A WTO dispute settlement panel has ruled against India in a tariff dispute with the EU, Chinese Taipei, and Japan. The panel said India has violated global trading norms over import duties on various Information and Communication Technology (ICT) products.
What is the dispute?
The European Union first raised a complaint against India’s tariffs in 2019. India had placed customs duty on ICT products like mobile phones, mobile phone accessories and components, electric wires, and cables among others, ranging from 7.5% and 20%. India, being a signatory to the 1996 Information Technology Agreement (ITA) cannot put custom duties beyond a certain amount on specific products.
The European Union first challenged these tariffs, stating that they went against India’s WTO and ITA commitments as well as the global trading regulations. They argued that the tariffs imposed were inconsistent with the tariff norms set in the GATT 1994.
The international body also claimed that the EU exports of such technology to India resulted in costs of up to 600 million euros annually. Later, Japan and Chinese Taipei supported the EU’s claims.
The EU called for consultations on 2 April 2019. On 17 April 2019, Singapore and Chinese Taipei requested to join the consultations. Later Canada, Japan, the US, and China requested to join the consultations. As per WTO dispute settlement norms, bilateral consultations are the first step to be taken by the parties.
Arguments by India
India put forth three arguments to the dispute panel. Firstly, it argued that its commitments to the ITA were static in nature and thus did not include newer products introduced after it was incorporated into the WTO.
Secondly, it claimed that under Article 48 of the Vienna Convention on the Law of Treaties, parts of India’s WTO schedule are invalid as a result of an error on India’s part during the transposition of its Schedule from the Harmonized System (HS)2002 to the HS2007.
Lastly, India said that its errors were rectifiable under the 1980 Decision and the EU’s objection to such rectification was unfounded.
Dispute panel’s findings and verdict
The panel rejected the argument that India’s tariff commitments were static in nature and held that their tariff rules must include all products under the WTO laws and ITA.
Secondly, it accepted in good faith that India had assumed its tariff commitments under the WTO schedule were limited to the scope of its ITA commitments which would not be expanded by its transposition to HS2007. However, the panel found that India failed to prove that this assumption was an integral part of India’s consent to be bound by the HS2007.
Lastly, the panel declined to draw conclusions on India’s request that the EU violated the 1980 Decision, stating that this was a claim rather than a defense. Even if the dispute settlement panel was to make such findings it would not affect or change India’s WTO obligations.
The panel’s report concluded that India has violated the rules set forth in the GATT 1994 and recommended that India bring forth measures that are in conformity with its trading obligations.
India now has the option to appeal to the WTO appellate body, the final authority on trading disputes. However, the appeal could take another year as the appellate body is currently non-functional due to objections amongst member countries regarding the appointment of members.
