EU again requests WTO to set up dispute panel against India's import duty on ICT products

The European Union (EU) has again requested the WTO's trade dispute settlement body to set up panel for a case against India's import duty on certain ICT products like mobile phones and components.

India has earlier blocked the first request from the EU for the establishment of a dispute panel.

"Now, this issue of request from the EU for the establishment of a panel will be considered in the next meeting of the dispute settlement body on March 30. This is the EU's second request," an official said.

On March 5, India expressed its disappointed with the European Union's request for the establishment of a panel as New Delhi believed that consultations held with the EU on May 21, 2019 were constructive and India was able to address the concerns raised by the EU by adequately explaining its measures concerning tariff treatment on certain goods in the ICT (information and communication technology) sector.

The European Union on April 2, 2019 had dragged India into WTO's dispute settlement mechanism over imposition of import duties on certain ICT product, including mobile phones, alleging breach of global trade norms.

The products included are mobile phones and components, base stations, integrated circuits and optical instruments.

"Despite its (India) earlier legally binding commitment in the WTO not to charge any duties on these products, India has been applying duties ranging from 7.5 per cent to 20 per cent. These import duties are therefore in clear breach by India of WTO rules. The levies affect EU exports worth Euro 600 million per year," the EU had alleged.

In October 2018, India hiked import duty on certain communication items, including base stations, to up to 20 per cent as part of efforts to check a widening current account deficit by curbing imports.

Seeking consultation is the first step of dispute settlement process as per WTO rules. If the consultations requested with both do not result in a satisfactory solution, the EU can request that the WTO set up a panel in the case to rule on the issue raised.

India had stated that the request for consultations and the establishment of a panel submitted by the European Union carefully avoid any references to either ITA-1 or ITA-2 which are key to understand the issues.

It is of the view that the Ministerial Declaration On Trade In Information Technology Products (ITA-1) does not contain any obligations to eliminate customs duties (and other duties and charges of any kind) on the products mentioned by the EU in its request for consultations and the request for the establishment of a panel.

"India is fully committed to its ITA-1 commitment and has been abiding by it over the years. India, on signing the ITA-1 in 1997, presented its schedule of commitments, which had subsequently been certified," the official said.

India considers that this dispute is an attempt to take advantage of the inadvertent error, of a purely formal character. It has reiterated that it is willing to cooperate with the European Union to seek a mutually satisfactory solution at a bilateral level.