The EU is using its domestic law to pressure New Delhi to do away with the import duties it levies on certain information and communication technology (ICT) products.
The bloc has resorted to using its Enforcement Regulation, which enables it to enforce international obligations when disputes are stuck at the World Trade Organization (WTO) due to its defunct Appellate Body. India has to reply to the consultations by February 10, 2025 else face unilateral action from the EU.
The WTO had, last year, ruled against India’s imposition of tariffs on mobile phones and electronic components, among other ICT goods, and New Delhi had appealed against the ruling.
“The European Commission will take the received input into account when considering possible proportionate commercial policy measures in response to India’s WTO-inconsistent duties, should a mutually satisfactory solution between the EU and India not be found,” the EU said.
The dispute was filed in 2019 when the EU, Taiwan and Japan had challenged the import duty of 7.5%-later increased to 15%-levied by India in 2017. India further raised the duty to 20% to boost local manufacturing. However, officials said that these are pressure tactics as India has also threatened the EU with retaliatory tariffs worth $1.1 billion on some products originating from the bloc against the extended safeguard duties on its steel imports from New Delhi.
“Since dispute settlement is not there, the EU wants arbitration under its Multi-Party Interim Appeal Arbitration Arrangement and threaten India with unilateral action,” said an official, adding that the WTO prohibits any unilateral action in such cases.
The EU has proposed the MPIA at the global watchdog as an alternative system to resolve WTO disputes, which India doesn’t agree with.
Separately, the two sides are also negotiating a bilateral free trade agreement.
