India appeals to the void in WTO dispute over ICT tariffs on mobile phones

India on Thursday appealed against a ruling by the dispute settlement body at the World Trade Organization (WTO) that had ruled against India’s imposition of tariffs on mobile phones and electronic components.

The appeal filed before the appellate body — the highest adjudicating authority — at the WTO is considered an ‘appeal into the void’, as the body is currently dysfunctional after the US blocked the appointment of judges to the body.

India said its decision to appeal involves “certain issues of law covered in the panel report and certain legal interpretations developed by the panel in the dispute”.

“This notice of appeal provides an indicative list of the paragraphs of the panel report containing the alleged errors of law and legal interpretation by the panel in its report, without prejudice to India’s ability to rely on other paragraphs of the panel report in its appeal,” India said in its notice.

The April 17 order of the dispute settlement body on three separate but similar disputes raised by the European Union (EU), Chinese Taipei, and Japan in 2019 said India violated its zero-tariff commitment under the Information Technology Agreement (ITA) under the multilateral trade body. However, the appeal filed is only against the order on the dispute with Japan.

“Japan considers that given the current situation of non-operation of the appellate body, all the procedural deadlines set out in the appellate body’s working procedures shall be deemed to be suspended. Consequently, until the appellate body resumes its operation and sets the schedule for this appeal, Japan reserves its full rights to file its own appeal on errors (if any) in issues of law covered in the panel report and legal interpretations developed by the panel and submit any relevant submissions for this case,” the Japanese side said in a statement at the WTO.

After Indian officials indicated that the verdict would not have any immediate impact as India would file an appeal with the WTO’s appellate body, in a written reply to a questionnaire by Business Standard, the EU threatened to impose retaliatory tariffs on Indian goods if New Delhi didn’t abide by the WTO ruling.

“In the event there is an appeal to the non-functioning WTO appellate body (i.e., an ‘appeal into the void’), the EU has in place legislation (the enforcement regulation) that allows it to enforce its rights by imposing Customs duties or other restrictions in response to an appeal into the void, should the EU decide to do so,” said a spokesperson for EU.

A trade expert said India’s appeal only against the Japan case and not against the EU one could be to avoid EU retaliation.

The EU has claimed that up to €600 million of its technology exports to India were adversely impacted annually due to India’s imposition of tariffs on information and communication technology products.

India, which is a signatory to the 1996 ITA, is required to eliminate tariffs on a range of products, including mobile handsets. Many countries had complained that the imposition of tariffs on information technology products by India was against the principles agreed upon under ITA. However, India had argued that at the time of signing the ITA, products such as smartphones did not exist, and hence, it was not bound to eliminate tariffs on such items.

The WTO dispute settlement panel had said that although it accepted ‘in good faith’ India’s argument, it had failed to demonstrate that this assumption constituted an essential basis of India’s consent to be bound by the certified schedule.