WTO hearing on auto dispute case today

WTO hearing on auto dispute case today

NEW DELHI, MAR 21: A joint World Trade Organisation (WTO) panel, set up to hear the auto dispute case with New Delhi involving the US and European Union, is scheduled to hold its first meeting in Geneva on Thursday. However, it is learnt that the participation of South Korea and Japan as third parties in the dispute will in no way influence the panel's proceedings or its verdict.

Under the WTO dispute settlement understanding (DSB), the third parties do not have the right to appeal before the WTO appellate body and, they thus, become co-complainants in the dispute, senior commerce ministry officials said here on Wednesday.

Officials explained that the panel will go by the submissions of Washington and Brussels, the two main complainants, as well as of the defendant, New Delhi, before pronouncing its views on the dispute.

The panel will examine whether New Delhi's auto policy "breaks" the WTO rules and "distorts" international trade as is being contended by both the US and EU. Its establishment is despite the strong protest registered by Indian ambassador on the WTO S Narayanan at the WTO DSB meeting in Geneva in October last.

In December 1998, Japan along with the US had participated in the talks between the EU and New Delhi on the auto policy. Subsequently, the EU had filed a petition in the WTO against the policy. The panel has also been constituted disregarding the WTO general council chairman's statement on December 17, 1999 requesting the members to exercise due restraint on issues relating to trade-related investment measures (TRIMs) and the specific decision taken by him on May 8 last on TRIMs transition period matters.

Under the TRIMs Act, all the developing countries were given a transition period of five years to eliminate all TRIMs maintained by them for balance of payments (BoP) reasons.

Officials said New Delhi does not maintain any WTO-inconsistent TRIMs and is not therefore seeking an extension of the transition period. They further said New Delhi's auto policy is not a TRIM nor has it been notified as a TRIM in the world trade body adding it is a measure taken under the BoP cover and like all such measures, it is to go by March 31, when the process of dismantling quantitative restrictions (QRS) on the remaining 715 tariff lines is completed.

New Delhi has been allowing imports of SKD/CKD kits/components under the auto policy that seeks to attract foreign direct investment in the domestic auto sector. Foreign atuo companies who are keen to set up shop in the country, have to achieve broad foreign exchange neutrality over the entire period of the memorandum of understanding to be signed between them and the director-general of foreign trade by balancing the actual cost insurance and freight (CIF) value of imports of SKD/CKD kits/components and the freight on board (FOB) value of exports of cars and components over the same period.