Economy

WTO sets up dispute panel on India’s ICT tariffs based on EU’s complaint

Amiti Sen New Delhi | Updated on June 29, 2020 Published on June 29, 2020

India blocks complaints by Japan, Chinese Taipei

The World Trade Organisation (WTO) has agreed to a second request from the European Union for the establishment of a dispute settlement panel to rule on India’s import tariffs on certain information and communication technology (ICT) goods.

First requests for panels on India’s ICT tariffs from Japan and Chinese Taipei were, however, blocked by India, a Geneva-based official told BusinessLine.

The requests for dispute panels against India’s tariffs on ICT products such as mobile phones, cameras, headphones and earphones, by the three members, was examined by the Dispute Settlement Body (DSB) of the WTO on Monday.

India does not immediately run the risk of retaliatory measures from the complaining countries if the panel’s ruling is adverse because in the absence of a functioning Appellate Body of the WTO, it may be able to disregard the verdict, say experts.

The EU complained to the WTO 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 the country had adopted measures to reinforce and regularly increase import duties, up to 20 per cent.

EU’s export hit

The EU’s annual exports of ICT products affected by the import duties amounted to around €400 million, it said.

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.

“If Chinese Taipei and Japan appeal for a second time to the DSB, panels will be set up based on their requests as well,” the official said. The target country cannot block requests for panels from complaining members the second time round.

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, said a Delhi-based expert.

The Appellate Body has not been functioning since December 2019 as the US had not allowed the appointment of new judges to the panel which cannot work without at least three judges. The US has said that only when certain reforms are brought about in the functioning of the Appellate Body can it allow judges to be inducted.

Published on June 29, 2020
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