The World Trade Organization (WTO) is set to establish two more dispute settlement panels, at the requests of Japan and Chinese Taipei, against import duties on mobile phones and some other ICT products imposed by India.

The Dispute Settlement Body of the WTO will consider second requests for panels made by both countries in its meeting on July 29, an official said.

Last month, a dispute panel was established against India at the request of the EU on the same matter, but New Delhi refused to meet the bloc's request to allow one panel to deal with all three complaints.

“In the DSB meeting last month, India was able to block the requests of Japan and Taiwan for a panel as those were first requests made by the countries. This time panels will have to be set up as second requests can’t be blocked,” an official said.

Items identified by Japan

The items identified by Japan as subjects of unfair tariff treatment include mobile phones, 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 argued that the products fall within the scope of the relevant tariff lines for which India has set the bound rate of zero percent (under the IT Agreement) but that India is applying duties in excess of the bound rate. Japan has been worried about the tariffs since 2014, when India began applying duties above its bound rates, it said.

It further said that it had been forced to seek a panel as consultations with India held in May 2019 failed to resolve the dispute. Like the EU, Japan requested that India agree to a single panel to review the three complaints in order to ensure the efficient use of resources, which would be of benefit to both India and the complainants, particularly given the current pandemic circumstances.

Echoing Japan's arguments, Chinese Taipei said that India's tariffs on ITC goods, falling under five tariff lines, were in excess of the zero per cent bound rate set out in its WTO schedule of commitments. For some products, the applied tariff rate is as high as 20 per cent, it said.

It, too, pointed out that discussions with India on the matter last year failed to resolve the issue and hence it was seeking a dispute panel.

India argued at the last DSB that it was disappointed with the request of Japan, a close trading partner, as it was essentially seeking to get India to take on commitments under ITA-II which it never agreed to and take advantage of an error made by India when transposing its tariff lines to the updated HS. It used the same argument to dismiss Chinese Taipei’s complaint.

As the Appellate Body of the WTO is dysfunctional because of the US' refusal to allow appointment of new judges till its functioning “improved”, it might take a while for unfavourable verdicts against members to get implemented. The WTO members, however, are working to resolve the impasse.

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