WTO Panel Rules Against India in ICT Tariff Dispute [UPSC Current Affairs]

The World Trade Organization (WTO) panel ruled against India citing a violation of global trade rules in a dispute against the European Union, Japan and Taiwan. In this article, we give you details about this development, important for the IAS exam economy segment.

WTO panel rules against India in ICT tariff dispute with EU, others

What is the dispute?

• In 2019 disputes arose due to the challenge by the European Union, Japan and Taiwan against the imposition of import duties on IT products.
• India introduced import duties between 7.5 per cent and 20 per cent for products such as mobile phones, mobile phone components and accessories, line telephone handsets, base stations, static converters or electric wires and cables. 
• The imposition of import duties was challenged by the EU since it deemed these duties a direct breach of WTO rules.
• The EU argued that under the WTO commitments, India is obliged to apply a zero-duty rate to such products.
• Under the 1996 Information Technology Agreement (ITA), India is required to eliminate tariffs on a range of products, including mobile handsets since India is a signatory. 
• However, in order to promote domestic manufacturing and curb the dumping of electronic products from China, India has been imposing tariffs on certain electronic items. 
• Despite complaints by many countries about the violation of ITA principles by India due to the imposition of tariffs, India argues that smartphones did not exist during the time of signing of the agreement and hence it is not bound to eliminate tariffs.

WTO Panel Ruling

• The panel recommended India take measures to ensure conformity with its obligations under the General Agreement on Tariffs and Trade 1994.
• The WTO dispute settlement panel said that though it accepted India’s argument of the non-existence of smartphones during the signing of the agreement in good faith, the panel found that India had failed to demonstrate that this assumption constituted an essential basis of India’s consent to be bound by the certified Schedule.
• Since the WTO appellate body is absent, the EU has asked India to resolve the matter through a multi-party interim appeal arbitration arrangement (MPIA) which is an alternative system for resolving WTO disputes that are appealed by a member nation.
• But India is in favour of the restoration of the WTO appellate body and is against multi-party interim appeal arbitration arrangement (MPIA).
• To conclude, experts are of the opinion that India benefited significantly from the imposition of tariffs by way of increasing investments including those from Apple and Foxconn.
  

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