World Trade Organisation

World Trade Organisation

News: A WTO Panel has ruled against India in a dispute over Information technology (IT) tariffs with the European Union (EU) and other countries.

Instructions – The current issue is one of many that India has been dealing at WTO. It is important to understand crux of the issue and highlight it in your mains answers pertaining to issues in International bodies.

What is WTO?
1. It came into being in 1995. The WTO is the successor to the General Agreement on Tariffs and Trade (GATT) established in the wake of the Second World War.
2. Its main purpose is to help trade flow smoothly, freely and predictably.
3. It has 164 members, accounting for 98% of world trade.
4. The WTO’s rules – the agreements – are the result of negotiations between the members. The current set is largely the outcome of the 1986- 94 Uruguay Round negotiations, which included a major revision of the original GATT.
5. The WTO Secretariat  Geneva (Switzerland).

What is WTO ministerial Conference?
1. It is the WTO’s top decision-making body and usually meets every two years.
2. All members of the WTO are involved in the MC, and they can take decisions on all matters covered under any multilateral trade agreements.

What is the current issue about?
1. India has been looking to promote domestic IT manufacturing and reduce its dependence on imports, but this approach has been challenged by the EU and other countries, who argue that such measures are Protectionist and violate Global Trade Rules.
2. In 2019, the EU challenged India's introduction of import duties of between 7.5% and 20% for a wide range of IT products, such as mobile phones and components, as well as integrated circuits, saying they exceeded the maximum rate.
3. Additionally, Japan and Taiwan complained the same.

What was the ruling?
* The panel found that India's tariffs on certain IT products violated global trading rules, as they were found to be inconsistent with terms decided under Information Technology Agreement.
* The ITA is a global trade agreement that aims to eliminate tariffs on a wide range of IT products. India is signatory to the 1996 ITA.
* The ruling has highlighted the need for India to align its trade policies with global norms and obligations.
* It also underscores the challenges that developing countries like India face in balancing their domestic policy objectives with their international trade commitments.
* However, India argued that at the time of signing the ITA, products such as smartphones did not exist and hence, it was not bound to eliminate tariffs on such items.

What options does India have?
*  India has a choice to appeal against the WTO ruling over IT tariffs, but if India Appeals the case will be held in Legal Purgatory. It is because the WTO's top appeals bench is no longer functioning due to the US opposition to judge appointments.
* Legal purgatory is used to describe a situation where a legal case or dispute is in a state of limbo, without resolution or a clear path forward.
* This situation can be particularly challenging for countries that are seeking to resolve trade disputes in a transparent and rules-based manner, as it undermines the effectiveness of the WTO's dispute settlement mechanism.

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