DISPUTE SETTLEMENT

DS: India — Tariff Treatment on Certain Goods in the Information and Communications Technology Sector

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 the European Union

On 2 April 2019, the European Union requested consultations with India concerning the tariff treatment that India accords to certain goods in the information and communications technology sector.

The European Union claimed that the measures appear to be inconsistent with:

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

On 17 April 2019, Singapore and Chinese Taipei, requested to join the consultations. On 18 April 2019, Canada, Japan, Thailand and the United States requested to join the consultations. On 19 April 2019, China requested to join the consultations.

 

Panel and Appellate Body proceedings

On 17 February 2020, the European Union requested the establishment of a Panel. At its meeting on 28 February and 5 March 2020, the DSB deferred the establishment of a panel.

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

On 19 August 2020, the European Union requested the Director-General to compose the panel. On 31 August 2020, the Director-General composed the panel.

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 In its co estimated that it would issue its final report to the parties in the second quarter of 2022. 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 (DS584 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.

The European Union challenged the tariff treatment that India accorded to certain information communications technology (ICT) products falling under the following tariff items of India's WTO Schedule: 8504.40 ex02; 8517.12; 8517.61; 8517.62; 8517.70 ex01, ex02, and ex03; 8518.30 ex01; and 8544.42 ex01.

The European Union 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.

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 the European Union'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.

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 the European Union 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 8504.40 ex02, 8517.12, 8517.61, 8517.62, and 8517.70 ex01, ex02, and ex03 of India's WTO 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.
  • At the time of the Panel's establishment, India's tariff treatment of products falling under tariff items 8518.30 ex01 and 8544.42 ex01 was inconsistent with Article II:1(b), first sentence, because certain such products were subject to ordinary customs duties in excess of those set forth and provided in India's WTO Schedule unless they satisfied certain conditions not set forth in that WTO Schedule. The Panel also found that India's tariff treatment of such products was less favourable than that provided in its WTO Schedule, such that India was acting inconsistently with Article II:1(a) of the GATT 1994.
  • As of 1 February 2022, India accords unconditional duty-free treatment to products falling under tariff items 8518.30 ex01; and 8544.42 ex01, 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 the European Union treatment no less favourable than that provided for in its WTO Schedule, India's tariff treatment of such products is consistent with Article II:1(a) of the GATT 1994.

On 2 June 2023, the European Union and India requested the DSB to adopt a decision that, upon a request by either party, the DSB shall no later than 19 September 2023 adopt the report of the panel in this dispute unless (i) the DSB decides by consensus not to do so or (ii) either party to the dispute notifies the DSB of its decision to appeal pursuant to Article 16.4 of the DSU. Any such adoption or appeal of the panel report would be deemed to have occurred within the 60-day time period specified in Article 16.4 of the DSU. At its meeting on 15 June 2023, as jointly requested by the parties, the DSB agreed to provide the additional time for the adoption or appeal of the panel report. At its meeting of 19 September 2023, in response to a joint request from the parties dated 5 September 2023, the DSB extended the deadline for the adoption or appeal of the panel report to 18 December 2023.

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