The Platform

Photo illustration by John Lyman

India’s trade protectionism ran afoul of its commitments to the World Trade Organization.

On April 17, a WTO dispute panel issued its report on a case involving India and three of its trading partners: the European Union, Japan, and Taiwan. The panel found that India had breached its WTO commitments by applying tariffs that exceeded the maximum rates that it had agreed to in its WTO schedule. These tariffs affected a wide range of technologies, such as mobile phones and components, as well as integrated circuits. The panel recommended that India bring its measures into conformity with its obligations under the WTO Agreement.

The European Union welcomed the panel’s ruling, which confirmed its position that India’s tariffs were illegal and harmed its exports. The EU estimated that up to $654 million of its exports were directly affected by India’s tariffs on an annual basis. The EU stressed the importance of respecting the rules-based trading system and urged India to comply with the panel’s recommendations without delay.

India’s response to the ruling remains unclear, as its diplomatic mission in Geneva has not yet commented on whether it plans to appeal. If India chooses to appeal, the case will be referred to the WTO Appellate Body, which is currently non-functioning due to Washington’s opposition to judicial appointments. As a result, the case is unlikely to be resolved until a solution is found to restore the Appellate Body’s operation.

The WTO’s ruling on India’s import duties on certain technologies has significant economic implications for India and the broader global trading system. India’s import duties on technologies have been a contentious issue, with some arguing that they are necessary to protect domestic industries and promote economic development, while others argue that they are a barrier to trade and innovation.

From an economic perspective, the ruling could have both positive and negative effects on India and the global trading system. On the positive side, the ruling could help to remove a barrier to trade in the tech sector, making it easier for Indian companies to access critical technologies. This could stimulate innovation and competition in the sector, boosting economic growth and development in India and the region.

Moreover, by bringing India’s tariffs in line with its WTO commitments, the ruling could help to strengthen the rules-based trading system and promote greater transparency and predictability in global trade. This could have positive spillover effects on other sectors and regions, promoting greater economic integration and reducing trade tensions.

However, there are also concerns that the ruling could have negative economic implications for India and the global trading system. For example, some experts argue that the ruling could limit India’s ability to use tariffs as a tool to protect sensitive sectors and promote domestic industry. This could have implications for India’s broader trade policy and its relationship with key trading partners such as the United States and China.

Overall, the impact of the WTO’s ruling will depend on how India responds and how it balances its obligations under the WTO with its broader economic and trade policy objectives. The ruling highlights the ongoing challenges facing the global trading system and the importance of finding a balance between promoting economic growth and development while respecting the rules of the international trading system.

Awais Abbasi is an independent researcher and holds a graduate degree in Political Science from the University of Bristol. He is currently​ serving as visiting fellow at the University of South Asia.