DISPUTE SETTLEMENT

DS: India — Tariff Treatment on Certain Goods

This summary has been prepared by the Secretariat under its own responsibility. The summary is for general information only and is not intended to affect the rights and obligations of Members.

  

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Summary of the dispute to date

The summary below was up-to-date at

Consultations

Complaint by Japan

On 10 May 2019, Japan requested consultations with India regarding the tariff treatment that India allegedly accords to certain goods (telephones for cellular networks or for other wireless networks; base stations; machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus; and parts of telephone sets and other apparatus for the transmission or reception of voice, images or other data).

Japan claimed that the measures at issue appear to be inconsistent with Articles II:1(a) and II:1(b) of the GATT 1994.

On 15 May 2019, the United States requested to join the consultations. On 16 May 2019, Chinese Taipei requested to join the consultations. On 17 May 2019, Canada and Singapore requested to join the consultations. On 21 May 2019, China, the European Union and Thailand requested to join the consultations.

 

Panel and Appellate Body proceedings

On 19 March 2020, Japan requested the establishment of a panel. At its meeting on 29 June 2020, the DSB deferred the establishment of a panel.

At its meeting on 29 July 2020, the DSB established a panel. Brazil, Canada, China, the European Union, Indonesia, Korea, Norway, Pakistan, the Russian Federation, Singapore, Chinese Taipei, Thailand, Turkey, Ukraine, the United Kingdom and the United States reserved their third-party rights.

Following agreement of the parties, the panel was composed on 7 October 2020.

On 4 March 2021, the Chair of the panel informed the DSB that, in accordance with the timetable adopted following consultations with the parties, the panel estimated that it would issue its final report to the parties in the second quarter of 2022. In its communication, the Chair apprised the DSB that the report would be available to the public once it was circulated to the Members in all three official languages, and that the date of circulation depends on completion of translation. On 29 June 2022, the Chair of the panel informed the DSB that the COVID-19 pandemic and related travel and other restrictions caused further delays in the proceedings and, as a result, the panel estimated that it would issue its final report to the parties not before the end of 2022. On 16 December 2022, the Chair of the panel informed the DSB that due to delays caused by the COVID-19 pandemic and the fact that the same panelists have been appointed in this dispute and in two other disputes (DS582 and DS588), the panel now estimated that it would issue its final report to the parties in the first quarter of 2023.

On 17 April 2023, the panel report was circulated to Members.

Japan challenged the tariff treatment that India accorded to certain information communications technology (ICT) products falling under the following tariff items of India's First Schedule: 8517.12.11, 8517.12.19, 8517.12.90, 8517.61.00, 8517.62.90, 8517.70.10 and 8517.70.90.

Japan claimed that these measures lead, or led at the time of the Panel's establishment, to the application of ordinary customs duties in excess of those set forth in India's Schedule of Concessions, and, therefore, are or were inconsistent with Articles II:1(a) and (b) of the GATT 1994. Japan also claimed that even where India unconditionally exempts certain products from customs duties, India acts inconsistently with Article II:1(a) because India grants those exemptions through customs notifications which are subject to the possibility of repeal at any time, thus creating a lack of foreseeability for traders.

India argued that: (i) its binding tariff commitments are set forth in the Information Technology Agreement (ITA), and those commitments are static and did not change due to their incorporation into India's WTO Schedule; (ii) pursuant to Article 48 of the Vienna Convention on the Law of Treaties (Vienna Convention), aspects of India's WTO Schedule are invalid as a consequence of an error on the part of India during the transposition of its Schedule from the HS2002 to the HS2007; and (iii) the errors in India's WTO Schedule are of a formal nature and were therefore capable of rectification pursuant to the 1980 Decision, such that Japan's objection to India's proposed rectification of its Schedule is inconsistent with the requirements of the 1980 Decision. India also raised several arguments concerning the nature of the conditions attached to certain tariff treatment, as well as the tariff classification of certain products. India further argued that pursuant to the India-Japan Comprehensive Economic Partnership Agreement (CEPA), and the implementing notification thereof, India exempts from ordinary customs duties the products at issue when originating from Japan, and therefore accords to products of Japan tariff treatment that is consistent with India's duty-free tariff commitments set forth in its WTO Schedule.

General issues concerning India's WTO tariff commitments

  • The Panel rejected India's assertions that its binding tariff commitments are set forth in the ITA, and found that: (i) the ITA is not a covered agreement within the meaning of the WTO Agreement and the DSU; and (ii) the ITA is not the source of India's legal obligations in these disputes. The Panel also held that India's WTO tariff commitments are not static in nature.
  • The Panel further found that India did not satisfy the requirements of Article 48 of the Vienna Convention. The Panel accepted in good faith India's argument that at the time of the transposition of its HS2002 Schedule into its HS2007 Schedule, India had assumed that the scope of its WTO commitments was limited to the scope of its ITA undertakings and that the scope of those tariff commitments would not be expanded through the HS2007 transposition process. However, the Panel found that India had failed to demonstrate that this assumption constituted an essential basis of India's consent to be bound by the certified Schedule. The Panel also found that India was put on notice of the possibility that its WTO tariff commitments in its HS2007 Schedule may have expanded from those set forth in its HS2002 Schedule, and similarly, that its WTO tariff commitments in its HS2007 Schedule may have expanded from those set forth in the ITA. Thus, even if Article 48 applied in WTO dispute settlement (which the Panel did not consider it necessary to address), the circumstances did not satisfy the requirements of Articles 48(1) and (2) of the Vienna Convention.
  • The Panel further declined to make findings on India's request that the Panel find that Japan violated paragraph 3 of the 1980 Decision by raising objections to India's requested rectification unfounded in law, and thereby impeded India's rights to make a formal rectification to its schedule of concessions under the 1980 Decision. The Panel found that India's requests were claims, not affirmative defences, and therefore fell outside the Panel's terms of reference. The Panel also considered that, even if it made findings on this issue, to the extent that there remained objections on record to India's rectification request (including those by WTO Members who were not parties to this dispute), India's WTO Schedule would remain unmodified, and the findings requested by India would not modify India's WTO obligations as set forth in its WTO Schedule.
  • Thus, the Panel found that India's WTO tariff commitments, for purposes of applying Articles II:1(a) and (b) of the GATT 1994, are set forth in its WTO Schedule.

Articles II:1(a) and (b) of the GATT 1994

The Panel found that:

  • India's tariff treatment of products falling under tariff items 8517.12.11 and 8517.12.19 of India's First Schedule at the time of the Panel's establishment, and which presently fall under tariff items 8517.13.00 and 8517.14.00 of India's First Schedule, is inconsistent with Article II:1(b), first sentence, because such products are subject to ordinary customs duties in excess of those set forth in India's WTO Schedule. The Panel also found that India's tariff treatment of such products is less favourable than that provided in its WTO Schedule, such that India is acting inconsistently with Article II:1(a) of the GATT 1994.
  • India's tariff treatment of products falling under tariff items 8517.61.00 and 8517.62.90 of India's First Schedule is inconsistent with Article II:1(b), first sentence, because such products are subject to ordinary customs duties in excess of those set forth in India's WTO Schedule. The Panel also found that India's tariff treatment of such products is less favourable than that provided in its WTO Schedule, such that India is acting inconsistently with Article II:1(a) of the GATT 1994.
  • India's tariff treatment of products falling under tariff items 8517.70.10 and 8517.70.90 of India's First Schedule at the time of the Panel's establishment, and which presently fall under tariff items 8517.71.00, 8517.79.10, and 8517.79.90 of India's First Schedule, is inconsistent with Article II:1(b), first sentence, because: (i) certain such products are subject to ordinary customs duties in excess of those set forth in India's WTO Schedule; and (ii) certain such products are subject to ordinary customs duties in excess of those set forth in India's WTO Schedule unless they satisfy certain conditions that are not set forth in that WTO Schedule. The Panel also found that India's tariff treatment of such products is less favourable than that provided in its WTO Schedule, such that India is acting inconsistently with Article II:1(a) of the GATT 1994.
  • India accords unconditional duty-free treatment to products falling under tariff item 8517.12.90 of India's First Schedule at the time of the Panel's establishment, and which presently fall under tariff item 8517.14.00 of India's First Schedule, in accordance with the terms of its WTO Schedule, and is therefore acting consistently with Article II:1(b), first sentence of the GATT 1994. The Panel also found that by according to the commerce of Japan treatment no less favourable than that provided in its WTO Schedule, India's tariff treatment of such products is consistent with Article II:1(a) of the GATT 1994.
  • Japan failed to demonstrate that, even where India accords products at issue treatment that is consistent with Article II:1(b) of the GATT 1994, the measures at issue in this dispute accord treatment less favourable than that set forth in India's WTO Schedule, inconsistent with Article II:1(a) of the GATT 1994, on the ground that India's customs notifications lack foreseeability or predictability, thus affecting conditions of competition for traders.
  • India failed to establish that Notification No. 69/2011 implementing the CEPA brings India into compliance with its WTO obligations pursuant to Articles II:1(a) and (b) of the GATT 1994. The Panel found that for products of Japan to access duty free treatment as set forth in India's WTO Schedule, they must satisfy preferential rules of origin which are not set forth in that Schedule, such that this notification does not accord unconditional duty-free treatment to the products at issue, and therefore does not bring India into consistency with its obligations under Articles II:1(a) and (b) of the GATT 1994.

On 17 May 2023, India notified the DSB of its decision to appeal to the Appellate Body certain issues of law and legal interpretations in the panel report. On 22 May 2023, in a communication addressed to the DSB, Japan indicated that, given the current situation of non-operation of the Appellate Body, it considered that all the procedural deadlines set out in the Appellate Body's Working Procedures were deemed to be suspended. Japan further indicated that, until the Appellate Body resumes its operation and sets the schedule for this appeal, Japan reserved 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 the case.

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