The European Union has expressed its disappointment at India’s rejection of interim arbitration to resolve the dispute over import duties on certain ICT (information and communications technology) products, including smartphones and components, and its “invalid” appeal to the non-functional Appellate Body.
At the World Trade Organisation’s Dispute Settlement Body meeting on Monday, India defended its decision, arguing that its long-standing position was that such interim agreements, as proposed by the EU, undermined the right of countries to appeal to a permanent standing body and that it was important to restore the functioning of the Appellate Body soon.
“The EU said it deeply regretted that India did not agree to the bloc’s repeated request to resolve the dispute through an appellate body and that its decision to appeal to a non-functioning appellate body prevented the bloc from resolving the dispute through adjudication,” a Geneva-based trade official told BusinessLine.
The RoDTEP scheme, which was announced in January 2021, will refund embedded duties and taxes such as VAT on fuel used in transportation, mandi tax and duty on electricity used in the manufacture of exported goods.
India seeks to convince US of RoDTEP’s WTO compatibility
New Delhi failed to reach a mutually acceptable solution (MAS) with Brussels on WTO dispute
Interim agreement
Three years ago, the EU and some other WTO members set up an interim mechanism to resolve appeals against WTO panel decisions in the absence of a functioning WTO Appellate Body. India opposed the interim mechanism.
In April 2019, the EU had complained about India’s import duties on certain ICT products, including mobile phones and components, base stations, integrated circuits and optical instruments, on the grounds that they were in breach of India’s WTO commitments, and requested consultations with the country. In August, the WTO established a dispute panel at the request of the EU. Japan and Chinese Taipei also filed similar disputes against India.
As India had committed to zero tariffs on many ICT products under the WTO’s IT Agreement (ITA-I), the complainants said that the tariffs imposed since 2014, which have gradually risen to 20 per cent, resulted in a breach of the commitment. New Delhi argued that the products were not covered by the ITA-I.
Dysfunctional body
In April 2023, the WTO Dispute Settlement Body ruled against India’s tariffs on ICT products. On 8 December, India appealed the ruling to the WTO Appellate Body. India had previously appealed the ruling in the Japan case. Discussions are continuing with Chinese Taipei to resolve the matter amicably.
At the DSB meeting on Monday, India expressed hope for an early restoration of the appellate body (which has been non-functional since December 2019 as the US has been holding up the appointment of judges) to “allow for the correction of the errors in the panel report” and help resolve the dispute.