WTO Panel Rulings against India in Mobile Duty Case – Diagnosis and Way Ahead

[Arun Goyal – Editor - ABS News Service/20.04.2023]

The three panel reports of WTO following the complaints of EU, Japan and Taiwan have not gone into the merits and demerits of whether mobile phones were covered under zero duty of the Singapore 1996 IT Agreement. India has held the view that mobiles did not exist in 1996 and were thus not part of HS classification list at that time.

Instead the panel maintained that India cannot go back on the bound rate of zero made erroneously in 2015.

Our industry has grown by leaps and bounds after the duty protection which checked the import of poor quality Chinese phones dumped into the Indian market ..following the duty protection to mobiles, significant investments in manufacturing by FDI companies like the Chinese companies Oppo and Vivo, Korean Samsung and American Apple have brought the domestic manufacturing to three lakh crs in the current financial year..exports are booming to hit one lakh crores..

Significant offtake in the PLI scheme to promote manufacturing are producing results.

All these developments are sought to be destroyed by the three panel rulings which have failed to address the main issue, namely. Mobile phones did not exist at the time of the signing of WTO agreement in 1996..they cannot be pulled into the deal at a later date without specific agreement of the signatories .

We feel that these kind of draconian rulings undermine the digital economy laboriously built layer by layer by developing countries like India on the strength interpretation of stray technicalities which capitalise on mistakes in interpretation which are not allowed to be corrected by the powers that be in WTO.

Our understanding of day to day following WTO over the last 30 years makes it clear that the basic IT Agreement concluded in 1996 is horribly out of date, it needs updation and revision of the HS (Harmonised System ) of coding which itself has gone through five revisions since 1996..however, the 1996 version remains alive in Singapore IT Agreement with its outmoded scope..the IT world has crossed many generations since but ITA 1 is stuck in time lending itself open to mistakes by the signatories.

Further, the Agreement is violative of basic WTO S&D (Special and Differential) principles of GATT and its successor WTO. These principles give special preferences to developing and least developed countries..The IT Agreement lacks these windows which promote manufacturing and employment creation in poor countries like India

Even Dispute Settlement which is the bedrock of the Marrakesh agreement of 1994 as the successor to GATT 1947 is not covered in ITA..thus the entry of WTO dispute settlement in the ita plurilateral agreement is through the back door meant to arm twist poor countries like India

India stands by free trade in IT goods..It allows duty free treatment to all the 217 tariff lines by a series of notifications issued over the last 18 years..these are at the cost of revenue and also manufacturing and employment and badly needed foreign exchange earnings ..India is following the original 1996 agreement but still managing to develop a digital economy .. however, the progress is being sought to be destroyed by malicious panel rulings.