The EU is unhappy with India’s plans to file an appeal at the WTO Appellate Body against an adverse panel ruling on its import duties on ICT products, including mobile phones, but in case the bloc imposes unilateral penal tariffs on Indian imports using its domestic law, New Delhi may impose retaliatory tariffs, according to official sources.
“The EU’s Trade Enforcement Regulation is a domestic law and not in conformity with WTO regulations. If used to act against India on the ground that its appeal was void because of the dysfunctionality of the Appellate Body, New Delhi can counter retaliate at the WTO,” an official told businessline.
Last month, a WTO panel had ruled that India had flouted multilateral trade rules, in a dispute with the EU, Japan and Taiwan, over import duties on ICT products, including mobile phones. It asked India to bring its rules in conformity with WTO norms by removing import duties on the identified items.
India decided to appeal against the verdict and approach the WTO Appellate Body and is, right now, working on its appeal. The EU, however, does not want India to go to the Appellate Body, as it is dysfunctional because of the US blocking the appointment process of new judges.
“The EU has asked India to instead join the Multi-Party Interim Appeal Arbitration Arrangement (MPIA), an alternative system for resolving WTO disputes floated by some members. India, however, believes such a move will be against its principles since it wants the Appellate Body to be restored,” said the official.
There are now indications that the EU may be mulling using its Trade Enforcement Regulation against India’s refusal to play ball.
The Trade Enforcement Regulation of the EU is a domestic law that enables the EU to adopt countermeasures when it obtains a favourable ruling from a dispute settlement panel of the WTO or in bilateral and regional agreements, and it has reasons to believe that the other party was not cooperating on the adjudication of the dispute.
“The EU has not invoked the Enforcement Regulation till date. But in theory if it uses it against India, then we can retaliate at the WTO and take action against EU imports. Such a move by the EU will be detrimental to trade interests of both sides,” the official explained.
Both sides are currently in talks to settle the matter amicably, the official added.