The Hindu Business Line : WTO upholds panel views on EC drug window violations

INDIA has notched up a major gain at the WTO in the dispute with the European Union on tariff preferences extended by the European Commission (EC) under the drug arrangements window of its Generalised Scheme of Preferences (GSP) which accords duty-free entry into the EU market to developing countries.

In a recently released report, the appellate body of the WTO has upheld the overall finding of the Dispute Settlement Panel (DSP) that the EC has violated its drug arrangements window of its GSP. The appellate body has held that the EC "failed to demonstrate that the drug arrangements are justified" under relevant provision of the Enabling Clause.

The ruling of the appellate body follows a notice of appeal filed by the EC on January 8 against the findings of the panel in this dispute.

The appellate body's view upholding the DSP findings is likely to provide some relief to Indian exporters to the EU, particularly those in the apparel sector who are otherwise disadvantaged due to duty concessions to Pakistan under the drug arrangements.

As Pakistan was part of the US-led alliance against terrorism in the wake of September 11, 2001, the EU used the GSP route to permit duty-free import of textiles goods from Pakistan into its member countries. India took up this issue with WTO subsequently and the dispute settlement body of the WTO ruled against this dispensation of the EU under the drug arrangements widow.

"The findings of the panel and the appellate body in this dispute is also a timely reminder that trade policy instruments cannot be used to serve political objectives," an official release issued by the Ministry of Commerce here today claimed.

During the panel and appeal proceedings, New Delhi clarified that while it did not dispute EU's right to give financial assistance to individual developing countries facing problems pertaining to drug production and trafficking, this could not be done at the expense of other developing countries facing different but equally pressing needs.

The appellate body has recommended that WTO's dispute settlement body request the European Commission to bring its measure into conformity with obligations under GATT (General Agreement on Tariffs & Trade). India would seek the adoption of the panel and appellate body reports in this dispute as early as possible.

While India attaches great value to the various global efforts to address drug trafficking, New Delhi strongly supports the need to resolve special problems afflicting developing countries. In India's view, the principal means of addressing such problems is by according primacy to the development dimension in the ongoing Doha Work Programme, which seems to have been given "a short shrift", the release added.