India, European Union eye mutually agreeable solution over ICT tariffs

Meetings between Indian, European Union officials set to take place today

India and the European Union (EU) are looking at a mutually agreeable solution concerning their dispute at the World Trade Organization (WTO) over tariffs on information communications technology (ICT) products imposed by New Delhi, said people in the know.

Meetings between Indian and European officials are set to take place as early as Friday.

The WTO’s dispute settlement body in April had ruled that India violated its zero-tariff commitment under the Information Technology Agreement enforced by the multilateral trade body after three similar but separate disputes were raised by the EU, Japan, and Chinese Taipei.

Thereafter, New Delhi said it would appeal against the judgment, although it would be considered an ‘appeal into the void’ since the appellate body — the highest adjudication authority at the WTO — is currently dysfunctional. As a result, India had said that the ruling would not have any substantial impact on India.

“Before India appeals, the EU wants to have a specific nature of engagement regarding the extent of injury caused to it (due to the IT tariffs imposed by India), and whether there is a way to straighten this out,” one of the persons cited above told Business Standard.

“However, any solution, if proposed (and eventually offered) will have to be WTO-compliant,” the person said.

END IN SIGHT

• The matter was also discussed at the sidelines of the Trade and Technology Council meeting 
• If talks fail, both sides may explore joint deferment
• Under joint deferment, India may postpone appeal against the ruling; European Union may defer the adoption of the World Trade Organization dispute settlement panel’s report

New Delhi believes that the EU has not been significantly affected by the imposition of tariffs on ICT products, considering that the inbound shipments of such products, including mobile phones and telephone handsets, from the trade bloc aren’t high. Moreover, the higher duties were mainly imposed to safeguard the domestic industry from cheap Chinese imports.

Alternatively, the EU claimed that up to €600 million of its technology exports to India were adversely impacted annually due to New Delhi’s imposition of tariffs on such products.

The matter was also discussed at the sidelines of the Trade and Technology Council meeting in Brussels last month.

The person quoted earlier said that in the absence of any solution, or if talks fail, both sides may consider joint deferment, where India may defer its appeal against the ruling and the EU may defer the adoption of the WTO dispute settlement panel’s report.

According to WTO rules, after the dispute settlement body comes up with its ruling, the right to file an adoption of the panel report and the right to appeal against the ruling is 60 days bound, unless there is a consensus among countries to not adopt or defer the report. In this case, India has time until June 16 to appeal against the ruling.

Last week, India appealed against the order on the dispute, but only with Japan. In the case of Chinese Taipei, the time to appeal has been deferred by 90 days.