April 21, 2023
Good morning. In today’s either/view, we discuss whether the WTO is right to rule against India in the ICT tariffs case. We also look at the increase in footfall in Kashmir’s Tulip Garden, among other news.
📰 FEATURE STORY
Is the WTO right to rule against India in the ICT tariffs case?
Global trade is a complex machinery, and keeping it in order isn’t easy. That’s what the World Trade Organisation (WTO) is for. Every country wants to get its slice of the global trade pie, and it’s the WTO’s job to ensure they all play fair. Easier said than done. Trade disputes often pop up where the WTO has to adjudicate.
In a recent case, the WTO ruled against India on the import duties it imposes on some information and communication technology (ICT) products, stating it violated global trading rules. The WTO felt these weren’t in line with its commitments. India doesn’t see it that way and will appeal.
Let’s see what this case is about. Since 2014, India has gradually introduced import duties of up to 20% on some products like mobile phones, phone components, and electric wires and cables. In 2019, the European Union (EU) requested consultations with India concerning tariffs that India imposed on certain goods in the ICT sector.
Japan and Taiwan filed parallel cases in 2019, following in the EU’s footsteps. Their claim was the same – high import tariffs on certain ICT products. In 2020, the EU requested the establishment of a panel, which convened in June of that year.
The crux of the issue is a disagreement over what items are included in an international agreement signed in 1996. One point to note is that the duties imposed by WTO member countries are linked to a common system of classifying items across countries. It’s called the Harmonised System (HS), developed by the World Customs Organisation (WCO).
The WCO regularly updates this system to keep up with innovations and technologies. When this is done, all member countries are given the relevant data to update on their end. This process is called ‘transposition’. Before the WTO was established, procedures were adopted that mandated parties contracted to the 1947 General Agreement on Tariffs and Trade (GATT) to incorporate the updated information and, if necessary, inform about any changes in their tax structures.
In 1996, several members of the WTO joined and finalised the Ministerial Declaration on Trade in Information Technology Products (ITA). India joined this pact in 1997. In April 1996, India wanted a modification in its WTO schedule. The changes, based on the 1996 HS, were certified.
In 2002, the WTO members agreed to more changes and updated the HS. When the WTO tried to update schedules in 2006 for the 2007 edition, it ran into problems. It was decided that developed countries would do their own transposition, and the WTO Secretariat would do it for developing ones unless stated otherwise.
According to the latest ruling, India didn’t indicate it would do the transposition. So the WTO Secretariat began the process. There’s some confusion about whom the WTO Secretariat communicated concerning India’s draft files for the 2007 transposition. In 2018, India wanted the WTO Secretariat to correct errors in the HS2007 schedule.
This is what it’s all about – India says the 2002 to 2007 HS transposition added some items in the zero tariff category that shouldn’t have been there. Several countries, including the EU, opposed India’s rectification.
VIEW: India messed up
Per the WTO order, the EU argued that India applied ordinary customs duties above the tariff bindings laid out in the WTO Schedule concerning products coming under the list identified by the EU. This is inconsistent with the obligations under the GATT. The EU panel wants India to “bring its measures into conformity with its WTO obligations.”
The WTO investigative panel looked into the matter. They found India imposed tariffs on certain parts of telephone sets and other equipment that was inconsistent with the GATT, just as the EU contended. India’s tariffs on certain goods went over the previously agreed-upon limit. The WTO panel said India was imposing conditions concerning tariffs on products that should be tariff-free.
Last year, after some back and forth, India agreed to extend the temporary WTO moratorium on import duties on vaguely defined electronic transmissions, broadly understood to be goods transmitted through electronic means. The Indian government argued imposing tariffs would help gain millions of dollars worth of lost tax revenue otherwise retained by developed countries and Big Tech companies. Some felt this was a mistake since there needed to be a clear definition of electronic transmissions.
COUNTERVIEW: Nothing malicious from India’s side
After the WTO order was released, India’s response was swift. It’ll appeal the WTO order. In 2018-19, India imposed an import duty on products like telephones for cellular networks or wireless networks and line telephone handsets, to name a few. From the government’s point of view, this was done to check sub-standard imports, promote local industries, and keep a check on the re-routing of cheap imports from different countries.
The WTO said India couldn’t impose tariffs on electronic goods since it’s a signatory to the 1995 Information Technology Agreement (ITA). India believes many items cited in the recent WTO order didn’t exist in 1995. India’s former Ambassador to the WTO, Jayant Dasgupta, seconded India’s position.
The Commerce and Industry said India has stated that the country has already brought its duty rates to 0% for two of the contested products – Headphones/Earphones and Electric converters, since February 2002. India argued that the products forming the centre of contention aren’t covered under the ITA, and those included in HS2007 were an error. Speaking of error, India argued that the definition of error under the Vienna Convention on the Law of Treaties meant the commitments under India’s WTO schedule were invalid.
- WTO panel rules against India’s import duty on certain ICT products – Fortune India
- EU wins World Trade Organization case on India’s tariffs on information and communication technology products – European Commission
- WTO panel just ruled that India has violated global trade agreements. All about tariff dispute – The Print
- India Loses Challenge Against High Import Duties On ICT Goods At World Trade Organization – MediaNama
- Clerical error led to wrong trade tariffs, says India; starts remedial actions to settle WTO dispute – CNBCTV18
What is your opinion on this?
(Only subscribers can participate in polls)
a) The WTO was right in ruling against India in the ICT tariffs case.
b) The WTO was wrong in ruling against India in the ICT tariffs case.
🕵️ BEYOND ECHO CHAMBERS
For the Right:
Behind TN Governor’s Thoothukudi Protest Claims, the Story of BJP’s Ties With Vedanta
For the Left:
Be horrified by reaction to Atiq Ahmed killing. But stop calling Indians bloodthirsty fools
🇮🇳 STATE OF THE STATES
Highest footfall in Tulip Garden (Jammu and Kashmir) – The Indira Gandhi Memorial Tulip Garden in Kashmir recorded its highest-ever footfall this season. The number of tourists exploded to 3.65 lakhs within a month of its opening and broke all previous records. Sahayiq Rasool, the deputy director of floriculture, said that domestic tourists accounted for 3 lakhs of the visitors, while foreigners appeared in thousands. In 2022, the garden witnessed a 3.6 lakh footfall.
Why it matters: The garden, set up in 2006 in Srinagar, is Asia’s largest tulip garden. Traversing around 30 hectares, the garden boasts 68 Tulip varieties and 1.6 million flowers which start blooming in late March. The record-breaking footfall this year was despite poor climatic conditions and the month of Ramadan. Around 60 gardeners tend to the iconic garden.
CM announces VP Singh statue (Tamil Nadu) – On Thursday, Chief Minister MK Stalin told the Legislative Assembly that the government would install a statue of former Prime Minister VP Singh in Chennai. The motivation behind the move is to express gratitude for Singh’s role in increasing people’s access to social justice, among other things.
Why it matters: The CM highlighted that despite reservations for Scheduled Castes (SCs) and Scheduled Tribes (STs), the Constitution doesn’t adequately protect the Backward Classes. The CM’s move comes a day after the state assembly passed a resolution asking the Centre to extend the protection and entitlements granted to SCs to those so-called SCs who converted to Christianity.
Amartya Sen’s eviction (West Bengal) – In the twilight hours of Wednesday, the Visva-Bharati University issued an order for Amartya Sen to vacate 13 decimals of land, which per its understanding the Nobel laureate holds under “illegal occupation.” The order asked Sen to clear the land within 15 days from the date of the issuance or May 6 – whichever came later. Sen, expected to come to Santiniketan in June, will take legal action against the order.
Why it matters: Visva-Bharati is the only central university in India to have the Prime Minister as its chancellor. The central university’s order came out of a legal process that began in March to take 0.13 acres of the 1.38-acre premises of Pratichi, Sen’s ancestral home in Santiniketan. In February, when the university undertook a land survey, Sen publicly questioned the varsity’s motives. Recently, the Congress party pegged the fiasco as another attempt of the centre to harass its critics.
Marathi in non-state board schools (Maharashtra) – The Maharashtra government has decided to make Marathi a graded subject rather than keeping it as a scoring subject, following complaints from parents. Starting from the present academic year 2023-24, Marathi will be a graded subject for Classes 8, 9 and 10 in CBSE, ICSE, and IB schools. Students will receive grades instead of marks. The assessment of Marathi will not be part of the board’s combined evaluation.
Why it matters: The new changes are applicable for three years, following which they will be reviewed again. Scores of parents had formally complained that Marathi scores were bringing down their children’s overall marks. In February 2020, the Maharashtra Compulsory Teaching and Learning of Marathi Language in Schools Bill 2020 mandated schools to teach Marathi, the violation of which led to fines.
Recommendations for Meitei in ST list (Manipur) – The Manipur High Court asked the state government to submit recommendations to the centre for the inclusion of Meitei or Meetei in the Scheduled Tribes (ST) list. It directed the state government to consider the case within four weeks. The ruling followed a petition by eight people, including the secretary of the Meetei (Meitei) Tribe Union.
Why it matters: The petitioners argue that Meetei or Meitei’s tribal status was extant before September 21, 1949, when the Manipur Merger Agreement was signed. It was part of the terms and conditions of the agreement. It’s one of the longstanding demands of several civil society organisations in the state. Meanwhile, other groups, like the All Tribal Students Union Manipur, strongly object to it.
🔢 KEY NUMBER
1.4286 billion – India’s estimated population by mid-year, according to the United Nations. It’ll exceed China’s population by 2.9 million.