DS: India — Additional and Extra-Additional Duties on Imports from the United States
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
Complaint by the United States.
On 6 March 2007, the United States requested consultations with India with respect to “additional duties” or “extra additional duties” that India applies to imports from the United States, which include (but are not limited to) wines and distilled products (HS2204, 2205, 2206 and 2208. The measures include:
- Sections 2 and 3, and First Schedule, of the Customs Tariff Act, 1975 (“basic customs duty”, “additional duty” and “extra additional duty”;
- Section 12 of the Customs Act, 1962 (“basic customs duty”);
- Customs Notification No. 5/2004 (8 January 2004) (“basic customs duty” inter alia on spirits);
- Customs Notification No. 20/1997 (1 March 1997) (“basic customs duty” inter alia on wine);
- Customs Notification No. 32/2003 (1 March 2003) (“additional duty” inter alia on wine and spirits);
- Customs Notification No. 19/2006 (1 March 2006) (“extra additional duty” inter alia on wine and spirits)
as well as any amendments, related measures or implementing measures.
The United States claims that the measures are inconsistent with Articles II:1(a) and (b), and III:2 and III:4 of the GATT 1994.
On 16 March 2007, the European Communities requested to join the consultations. On 21 March 2007, Australia requested to join the consultations. Subsequently, India informed the DSB that it had accepted the request of the European Communities to join the consultations. On 24 May 2007, the United States requested the establishment of a panel. At its meeting on 4 June 2007, the DSB deferred the establishment of a panel.
Panel and Appellate Body proceedings
At its meeting on 20 June 2007, the DSB established a panel. Australia, Chile, the European Communities, Japan and Viet Nam reserved their third-party rights. On 3 July 2007, the panel was composed. On 17 December 2007, the Chairman of the Panel informed the DSB that due to the complexity of the dispute, and the administrative and procedural matters involved, the Panel is not able to complete its work in six months. The Panel expects to issue its final report to the parties in the course of March 2008.
The Panel report was circulated to Members on 9 June 2008. The Panel concluded that the United States has failed to establish that the Additional Duty on alcoholic liquor is inconsistent with Article II:1(a) or (b) of the GATT 1994 and that it has also failed to establish that the SUAD is inconsistent with Article II:1(a) or (b) of the GATT 1994.
In the light of these conclusions, the Panel made no recommendations under Article 19.1 of the DSU. However, it offered some concluding remarks. The panel recalled that, after the establishment of this Panel, India issued new customs notifications making certain changes to the AD on alcoholic liquor and the SUAD, “to address concerns raised by [India's] trading partners”. The Panel noted that, therefore, its disposition of the US claims under Article II:1(a) and (b) does not necessarily imply that it would be consistent with India's WTO obligations for India to withdraw the relevant new customs notifications or otherwise re-establish the status quo ante, i.e., the situation as it existed on the date of establishment of the Panel. By the same token, in making this point, the panel did not wish to suggest that the entry into force of the new customs notifications necessarily implies that the AD on alcoholic liquor, to the extent it still exists, and the SUAD are WTO-consistent.
On 1 August 2008, the United States notified its decision to appeal to the Appellate Body certain issues of law covered in the Panel report and certain legal interpretations developed by the Panel. On 13 August 2008, India notified its decision to appeal to the Appellate Body certain issues of law and legal interpretations developed by the Panel. On 25 September 2008, the Chairman of the Appellate Body informed the DSB that due to the time required for completion and translation of the report, the Appellate Body would not be able to circulate its report within 60 days. The Appellate Body report would be circulated no later than 30 October 2008.
On 30 October 2008, the Appellate Body report was circulated to Members. The Appellate Body found:
The Appellate Body rejected the United States' claim that the Panel limited the scope of the United States' challenge to the Additional Duty as imposed only through Customs Notification 32/2003, and the Extra-Additional Duty as imposed only through Customs Notification 19/2006.
As regards the Panel's findings with respect to the interpretation of Articles II:1(b) and II:2(a), the Appellate Body found that the Panel erred in its interpretation that Article II:1(b) covers only duties or charges that “inherently discriminate against imports”, that the Panel erred in interpreting the term “equivalent” in Article II:2(a) as requiring only a qualitative comparison of the relative function of a charge and internal tax, thereby incorrectly excluding quantitative considerations relating to their effect and amount, and that the Panel also erred in finding that “consistency with Article III:2” is not a necessary condition in the application of Article II:2(a). Consequently, the Appellate Body reversed the Panel's findings that the United States failed to establish that the Additional Duty and the Extra-Additional Duty are inconsistent with Articles II:1(a) and II:1(b) of the GATT 1994.
The Appellate Body also found that the United States was required to present arguments and evidence that the Additional Duty and the Extra-Additional Duty are not justified under Article II:2(a), and that India, in asserting that those duties are justified, was required to adduce arguments and evidence in support of its assertion.
The Appellate Body also considered that the Additional Duty would not be justified under Article II:2(a) of the GATT 1994 insofar as it results in the imposition of charges on imports of alcoholic beverages in excess of the excise duties applied on like domestic products, and, consequently, that this would render the Additional Duty inconsistent with Article II:1(b) to the extent that it results in the imposition of duties in excess of those set forth in India's Schedule of Concessions.
The Appellate Body also considered that the Extra-Additional Duty would not be justified under Article II:2(a) of the GATT 1994 insofar as it results in the imposition of charges on imports in excess of the sales taxes, value-added taxes, and other local taxes or charges that India alleges are equivalent to the Extra-Additional Duty; and, consequently, that this would render the Extra-Additional Duty inconsistent with Article II:1(b) to the extent that it results in the imposition of duties in excess of those set forth in India's Schedule of Concessions.
Finally, the Appellate Body found that the Panel did not act contrary to Articles 3.2, 11, and 19 of the DSU in providing “concluding remarks” in paragraph 8.2 of the Panel Report. In view of its findings and conclusions, the Appellate Body made no recommendation, in this case, to the Dispute Settlement Body pursuant to Article 19.1 of the DSU.
At its meeting on 17 November 2008, the DSB adopted the Appellate Body report and the Panel report, as reversed by the Appellate Body report.
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