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TWN Info
Service on WTO and Trade Issues (Jul20/03) Geneva, 30 Jun (Kanaga Raja) – The WTO Dispute Settlement Body (DSB) on Monday agreed to establish a dispute panel, at the request of the European Union, to examine customs duties imposed by India on imports of certain information and communications technology (ICT) products. This was a second-time request and panel establishment was automatic. Chinese Taipei, Japan, the United States, Canada, Turkey, Korea, China, Brazil, Indonesia, Norway, Singapore, Thailand, the Russian Federation and Pakistan reserved their third party rights to the dispute. In a related development, requests for panels establishment by Japan and Chinese Taipei to also examine India’s tariff treatment of certain goods in the ICT sector were blocked by India at the DSB meeting. These were first-time requests and panels establishment will be automatic when the requests come up again before the DSB. US CONTINUES TO BLOCK AB APPOINTMENTS Under a separate agenda item, the US again blocked a joint proposal by 121 WTO members calling for the start of the selection process to fill six vacancies on the seven-member Appellate Body (AB). The US again said that it was not in a position to agree to the joint proposal, introduced by Mexico on behalf of 121 WTO Members that called for the simultaneous launch of the selection process to fill the six vacancies as soon as possible. Repeating the same arguments that it had made at previous DSB meetings, the US said, “We are not in a position to support the proposed decision. The systemic concerns that we have identified remain unaddressed.” EU-INDIA DISPUTE OVER ICT GOODS In its dispute raised against India (WT/DS582/9), the EU said that the consultations took place on 21 May 2019 with a view to reaching a satisfactory settlement of the matter, but the consultations failed to settle the dispute. According to the EU, the measures at issue are the duties applied by India on imports of certain ICT products in excess of the bindings set forth in India’s Schedule of Concessions and Commitments annexed to the GATT 1994. The EU said the ICT products concerned fall within the scope of the bindings included in India’s WTO Schedule with respect to the following tariff lines (based on the HS 2007): 8504.40.02, 8517.12, 8517.61, 8517.62, 8517.70.01/02/03, 8518.30.01, and 8544.42.01. In its WTO Schedule, India has bound the ad valorem duty rate for the above tariff lines at 0%. Yet the duty rate applied by India on imports of ICT products falling within the scope of those bindings is up to 20%, depending on the tariff line and is, therefore, in excess of the bound rate, the EU claimed. According to the EU communication, the measures at issue are inconsistent with India’s obligations under the covered agreements and, in particular, with Article II:1 (a) and (b) of the GATT 1994, because, through those measures, India accords to the EU commerce of certain ICT goods treatment less favourable than that provided for in its WTO Schedule and does not exempt those goods from ordinary customs duties or other import duties in excess of those set forth and provided in its Schedule, respectively. These measures adversely affect exports of goods from the European Union to India, and they nullify or impair the benefits accruing to the European Union directly or indirectly under the covered agreements, said the EU. According to a Geneva trade official, at the DSB meeting, the EU said that 400 million euros in annual exports of ICT goods to India are affected by the customs duties. The EU noted that both Japan and Chinese Taipei were also submitting requests for panel establishment over India’s tariff treatment that involved most of the same ICT products and were also based on the same legal arguments. In this context, the EU asked India to agree to the establishment of a single panel to examine all three complaints. It said this would be a more efficient use of the resources of the WTO, given the circumstances surrounding the COVID-19 pandemic. According to a Geneva trade official, India expressed disappointment over the EU’s request for the establishment of a panel. According to India, the EU was essentially trying to make India accept additional commitments on duty-free treatment of ICT products under the WTO’s expanded Information Technology Agreement (ITA-II), which India has not agreed to, as well as to take advantage of an error made by India when transposing its tariff lines to an updated Harmonized System (HS). India said that it has attempted to rectify this error which several WTO members have objected to. According to a Geneva trade official, India argued that purported concessions solely emanating from an incorrect HS transposition are not within the scope of substantive obligations contained in the original ITA, under which India committed to eliminate tariffs on covered ICT goods. Japan, Chinese Taipei and the US said that they shared the concerns voiced by the EU. THE MPIA According to a Geneva trade official, on behalf of 21 WTO members, the EU presented the multi-party interim appeal arbitration (MPIA) arrangement pursuant to Article 25 of the DSU, which was first circulated on 30 April. The EU said that the MPIA is only a temporary replacement for the WTO’s Appellate Body, which no longer has the minimum of three AB members necessary to hear appeals. According to the EU, the priority remains in finding a lasting solution to the current impasse in the Appellate Body. The EU said that openness and inclusiveness are important aspects of the MPIA and that any WTO member is welcome to join at any time. China, Hong Kong-China and Guatemala, who are proponents of the MPIA, said the initiative highlighted the importance of maintaining a two-tier dispute settlement system, even if its use was expected to be limited. According to a Geneva trade official, Japan said it was not participating in the MPIA because it was not certain if it served the ultimate purpose that its proponents have claimed. South Africa said its concerns was related to the possibility that the MPIA could become the default system and thus permanent. It said the initiative also largely ignores issues of concern to developing countries. The US said that it does not object to WTO Members utilizing Article 25 or other informal procedures to help resolve disputes, adding that it has had discussions with a number of Members regarding alternatives to the traditional WTO dispute settlement system. In agreeing to the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), WTO Members have set out explicitly the purpose of WTO dispute settlement: “The aim of the dispute settlement mechanism is to secure a positive solution to a dispute.” “If any Member considers that use of the arbitration provision in Article 25 may assist it in securing such a positive solution, the United States in principle supports such efforts,” it said. The US said it objects, however, to any arrangement that would perpetuate the failings of the Appellate Body, which it has catalogued in detail. “The arrangement that we are discussing under this agenda item incorporates and exacerbates some of the worst aspects of the Appellate Body’s practices,” it said. For example, the arrangement weakens the mandatory deadline for appellate reports; contemplates appellate review of panel findings of fact; and fails to reflect the limitation on appellate review to those findings that will assist the DSB in recommending to a Member to bring a WTO-inconsistent measure into conformity with WTO rules. The arrangement also promotes the use of precedent by identifying “consistency” (regardless of correctness) as a guiding principle for decisions. According to the US, the phrase “consistency and coherence in decision-making” does not appear anywhere in the DSU, but the arrangement makes such “consistency and coherence” in decision-making an explicit objective for different arbitrators in different disputes and then proposes procedures to facilitate this objective. Arbitrators are thus encouraged to create a body of law through litigation, rather than to focus on assisting the parties in securing a positive solution to a dispute. The introduction of a comprehensive set of documents to deal with perhaps two or three disputes over the next few years suggests that the real goal of the arrangement for some participants is not to help the participants resolve disputes but to create an ersatz Appellate Body that would serve as a model for any future WTO Appellate Body, said the US. In sum, rather than work towards meaningful reform, some Members have now re-directed the focus and energies of the Membership to pursue an arrangement that would, at best, perpetuate the failings of the Appellate Body. The US said that it does not support such an effort and does not view it as contributing to reform of the dispute settlement system so that it supports the WTO’s critical negotiating and monitoring functions and does not undermine those functions by over-reaching and gap-filling. OTHER ACTIONS Under a separate agenda item, the DSB agreed to establish a dispute panel, at the request of the EU, to examine anti-dumping duties imposed by Colombia on frozen fries from Belgium, Germany and the Netherlands. This was a second-time request and panel establishment was automatic. Japan, India, the US, China, Turkey, the Russian Federation, Honduras and Brazil reserved their third party rights to the dispute. Meanwhile, Japan blocked a request for panel establishment by Korea over measures imposed by Japan relating to the export of products and technology to Korea. This was a first-time request and panel establishment will be automatic when the request comes up again before the DSB. A request for panel establishment by Indonesia to examine certain measures imposed by the EU on palm oil and oil palm crop-based bio-fuels was blocked by the EU at the DSB meeting. This was a first-time request and panel establishment will be automatic when the request comes up again before the DSB. The DSB adopted the Appellate Body and panel reports in the dispute over Australia’s tobacco plain packaging measures.
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