Geneva: The European Union has dragged India into a major trade dispute at the World Trade Organization (WTO). According to Brussels, customs duties imposed by India on various products, including cell phones, in the Information and Communications Technology (ICT) Sector, had violated New Delhi’s scheduled tariff commitments at the WTO.
The EU has formally invoked the dispute settlement proceedings against India at the WTO on 2 April complaining that customs duties levied by India were in excess of its bound tariff rates on a range of ICT products during three Union Budgets of 2014-2015, 2007-2008 and 208-2019. Consequently, India violated its obligations under Article II:1 (a) and (b) of the GATT 1994 or the General Agreement of Tariffs and Trade 1994, the EU has maintained.
According to the EU’s complaint, the list of products on which India levied excess tariffs more than what New Delhi had committed to in its tariff schedule at the WTO include laboratory, hygienic, and pharmaceutical glassware, machines and apparatus for the manufacture of semiconductor boules or wafers, electronic transformers, telephone sets, particularly cell phones, transmission apparatus for radio or television broadcasting, electronic integrated circuits, oscilloscopes, and measuring or checking instruments, among others.
As a first step, Brussels has called India to enter into what are called Article 4 consultations within the next 30 days to address its specific charges. If the two sides fail to reach an amicable agreement after the consultations, then, the EU can call for establishing a dispute settlement panel to adjudicate on India’s customs duties.
Last year, the EU along with several other countries had complained that the customs duties imposed by New Delhi on mobile phones and other gadgets were in access of its bound tariff commitments. Six countries — the EU, the US, China, Japan, Canada and Norway, among others — raised concerns over the increase in India’s customs duties up up to 20% from 15% on high-end mobile phones and other items, including smart watches, which will attract duties up to 20% from 10% last year.
The six countries had maintained that excess duties and restrictive measures imposed on ICT products following the sudden spike in trade and current account deficits are said to be inconsistent with India’s scheduled commitments in the Information Technology Agreement (ITA). India, a signatory to the ITA, which came into force on 1 July 1997, is required to eliminate tariffs on ICT products, including mobile phones, the six countries had complained.
But the imposition of tariffs on IT products, including mobile telephones, during the Union Budget last year, were inconsistent with India’s bound tariff commitments.
In response to these complaints, India had maintained that that the IT goods in question did not fall under the ITA. New Delhi had repeatedly argued that that IT and telecom technologies have evolved with new applications and equipment, which were neither existent nor even conceived at the time of signing the ITA-I in December 1996, at the WTO’s first trade ministerial meeting in Singapore.
Therefore, India argued, the new IT products, including the latest Apple phones and other IT products do not strictly fall under the scope of ITA-I agreement. India maintained it was not undertaking any fresh commitments under ITA-2 agreement that came into force more than two years ago.