EU disappointed over India’s ‘right’ to approach WTO’s appellate body in ICT duty case

The European Union (EU) has expressed disappointment over India’s move to approach the WTO’s appellate body in a case related to customs duties on certain information and communications technology (ICT) products, an official said.

On December 8, India appealed against a ruling of the World Trade Organization’s (WTO) trade dispute settlement panel, in a case filed by the European Union against New Delhi’s import duties on certain ICT products including mobile phones and components, base stations, integrated circuits and optical instruments.

India has stated that it is the right of countries to appeal, and called for early restoration of the non-functional appellate body of WTO so that the panel’s errors can be corrected and the dispute can be resolved expeditiously.

New Delhi has also rejected the E.U.’s request to settle the dispute through arbitration.

On this request, India has said that such interim arbitration agreements undermine the right of countries to appeal to a permanent standing body, which is fundamental to the multilateral trading system.

The panel in April had ruled that import duties imposed by India on certain ICT products violate global trading norms. Appellate body is the final authority to decide on trade disputes in WTO. However, it is not functioning as the U.S. has been blocking appointments of judges in the body.

Bilateral consultation is the first step to resolve a dispute. If both sides are not able to resolve the matter through consultation, either of them can approach for the establishment of a dispute settlement panel.

The panel’s ruling or report can be challenged at WTO’s appellate body.

The issue came up during the meeting of the Dispute Settlement Body (DSB) on December 18 in Geneva, the headquarter of WTO.

In the meeting, the E.U. said the panel has ruled in its favour and has also found that India’s tariffs on these products are in excess of its WTO commitments.

It claimed that E.U. companies have been negatively impacted by India’s excessive import duties on ICT products since 2014, a time of enormous developments in the sector, including the rollout of 4G and 5G networks in India.

The E.U. has said that “while it recognizes India’s right to appeal, it deeply regrets that India did not avail itself of the opportunities which the EU repeatedly offered to have this matter adjudicated upon through appeal arbitration,” according to the Geneva-based official.

“India said that with respect to the E.U. request for arbitration, India’s long-standing position on the appellate body crisis and the implications of interim arbitration arrangements is that such interim agreements undermine the right of countries to appeal to a permanent standing body, which is fundamental to the multilateral trading system,” the official added.

In the meeting, Japan also expressed its disappointment at India’s decision to appeal the panel report.

In May, India filed another appeal in a similar dispute case initiated by Japan regarding the tariff treatment that India accords to certain goods in the ICT sector.

In its appeal, India sought review by the appellate body of the “errors of law and legal interpretation” by the panel in its report and findings.

The E.U. on April 2, 2019 had challenged the introduction of import duties by India on a wide range of ICT products, including mobile phones and components, base stations, integrated circuits and optical instruments.

The E.U. had claimed that the measures appear to be inconsistent with certain provisions of WTO. Later, Chinese Taipei and Japan also joined the dispute.

Further, India and Chinese Taipei are engaged in talks to resolve the issue outside the ambit of WTO.

On this, the official said India and Chinese Taipei have requested for additional time from the DSB to consider adoption of the panel ruling.

They suggested that the DSB further delay consideration of the panel reports until April 26, 2024 in order to help facilitate resolution of the disputes.

The DSB had agreed to two previous requests from Chinese Taipei to delay consideration until September 19 and December 18, 2023.

Under WTO rules, panel reports must normally be considered for adoption by the DSB within 60 days of the report’s circulation, unless a party to the dispute notifies its intention to appeal. The panel report was circulated to WTO members on April 17.

“The DSB agreed to the requests from Chinese Taipei and India,” the official said.