The EU might use the WTO ruling as a bargaining chip in the free trade agreement negotiations with India
Author
Prabhash Ranjan, Professor and Vice Dean, Jindal Global Law School, O.P. Jindal Global University, Sonipat, Haryana, India.
Summary
On the complaints brought by the European Union (EU), Japan, and Taiwan, three World Trade Organization (WTO) dispute settlement panels have found India’s tariffs on certain information and communication technology (ICT) products such as mobile phones inconsistent with India’s WTO obligations. Specifically, the panels concluded that India has violated Article II of the General Agreement on Tariffs and Trade (GATT) because India’s tariffs breach its Goods Schedule. Since one of the central objectives of the WTO is to boost transparency and predictability in the multilateral trading order, WTO member countries are under a legal obligation not to impose tariff rates in excess of their ‘bound’ or maximum tariff rates committed in their Goods Schedule. The Goods Schedules are based on the World Customs Organization’s classification system, which catalogues traded products with specific names and numbers. This is also known as the Harmonized System of Nomenclature (HSN). Due to the continuous emergence of new products owing to technological innovations, the HSN system is regularly updated to reflect new products, also known as ‘transposition’.
To justify higher tariff rates, India argued that its binding tariff commitments on ICT products are contained in the WTO Ministerial Declaration on Trade in Information Technology Products (ITA Agreement), which India joined in 1997. The ITA Agreement, adopted in 1996, is an arrangement through which select WTO member countries agree to eliminate duties on IT products. However, the commitments under the ITA become binding on a country under Articles II.1(a) and (b) of GATT only if they are incorporated in the Goods Schedule. Accordingly, the panels held that India’s Goods Schedule, not the ITA, is the source of India’s legal obligations on tariffs, including on products covered by the ITA.
Published in: The Hindu
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