WTO may set up dispute panels against India's ICT duties

Amiti Sen New Delhi | Updated on June 27, 2020

Dispute Settlement Board to take up EU, Taiwan request on Monday meet

India may find it difficult to thwart second requests made by the EU and Taiwan for setting up dispute panels at the World Trade Organisation (WTO) against import duties on ICT products, including mobile phones, imposed by the country. The Dispute Settlement Body (DSB) meeting, which will examine the requests, will take place on Monday.

New Delhi, however, may refuse to accept any adverse ruling of the panel after its hearing process is over if the functioning of the Appellate Body, the appeals body at the WTO, is not restored by then, say experts.

"The DSB is likely to grant the requests of the EU and Taiwan for dispute panels while considering their appeal against India in the meeting on June 29 as it is their second request," an official told BusinessLine.

India had managed to block their first requests in March this year where they had questioned import duties imposed on a range of ICT products such as mobile phones, cameras, headphones and earphones.

The EU complained that India had taken the commitment (as part of the IT Agreement signed in December 1996) not to apply import duties on ICT products but that for several years India has adopted measures to reinforce and regularly increase import duties on those products, up to 20 per cent. It said the value of its annual exports of concerned goods to India amounts to around € 400 million.

India argued that the EU was seeking to take advantage of an error made by India when transposing its tariff lines to an updated Harmonized System (HS). The imposition of import duties on the identified ICT products was part of India's attempt to rectify the error, it said.

Both EU and Taiwan have been unmoved by India's reasoning and have appealed to the DSB for the second time for a dispute settlement panel. But experts say that India may not have to worry about retaliatory measures as even if the panels come up with an adverse verdict, it may reject it till the Appellate Body is back in place."If the Appellate Body remains non-functional India could reject a panel decision as it would not have any avenue to appeal against it," a Delhi-based expert said.

The Appellate Body is non-functional since December 2019 as the US blocked the appointment of new judges to the panel because it was dissatisfied with the body's functioning.

Published on June 27, 2020

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