India has blocked China’s request for establishment of a panel to adjudicate the dispute it has brought before the World Trade Organisation (WTO) against Production Linked Incentive Scheme (PLI) for solar modules and duties charged on IT products.
The dispute was initiated on December 19 last year when China requested consultations with India on PLI for solar and duties on IT products. As the consultations failed to resolve the issue, China requested for the establishment of a panel under the Dispute Settlement Mechanism (DSM) to adjudicate on it.
At the meeting of the Dispute Settlement Body (DSB) on Friday, India blocked the Chinese request. However, China can again request for the establishment of the panel and on second attempt the panel does get constituted unless there is a consensus in the DSB against it. This, however, will not happen as long as the complainant is unwilling to join in that consensus.
If the panel is established in the next DSB meeting then India will have to defend its policy. After hearing both sides, the panel prepares its report on the dispute which becomes binding once it is adopted by DSB. Either party has the right to appeal the findings of the panel but at present the Appellate Body is non-functional because of the absence of quorum as the US has blocked appointment of new judges since 2017. As the dispute settlement mechanism is not fully functional, all disputes at WTO end in a limbo.
At Friday meeting. India said it had entered into discussions with China on the dispute in good faith but the Chinese decided to go ahead with the request for formation of the panel. The Indian representatives also said that the PLI for High Efficiency Solar Photovoltaic Modules is consistent with the WTO law.
India also said that China controls 80% of the global value chain of solar module production and its efforts to stall the legitimate growth of this industry in other countries is ‘strange’. It also said that the rule-based trading system with the WTO at its core should not support such mercantilism, which amounts to beggar-thy-neighbour.
Within the PLI for solar modules, China has objected to the conditions that stipulate a minimum local value addition to qualify for incentives.Through these measures, India accords to certain technology products originating in China less favourable treatment than local producers which is against WTO agreements and rules.
On IT products China has said India applies duties that are in excess of its commitments at the WTO. Over and above the normal custom duties the imposition of Agriculture Infrastructure and Development Cess (AIDC) on certain IT products have been flagged by China.
The products covered in the complaint include smartphones, machinery for manufacture for flat panel displays, wafers, semiconductors and integrated circuits.
TOPICSChinaPLIThis article was first uploaded on May twenty-three, twenty twenty-six, at thirty-seven minutes past one in the night.