India has proposed to renegotiate the upper tariff limits on certain items, reportedly information technology products, at the World Trade Organization (WTO) beginning 1 January. The move comes at a time when the Centre has been encouraging domestic manufacturing in select sectors through a production-linked incentive scheme under the Atmanirbhar BharatAbhiyan. India hereby reserves the right under Article XXVIII:5 of the GATT 1994 to modify its Schedule XII, during the next three-year period beginning on 1 January 2021,” India’s one-line notification to WTO members said.
WTO rules allow countries to renegotiate bound rates, or upper tariff limits, for products with substantial interest in exports if the country’s applied or current tariff is about to breach the bound rate. The country has to compensate to raise its bound rate to the exporting country through negotiations. In 1988-99, after India lost the case for quantitative restriction on rice and maize, it had to renegotiate tariffs of such items under Article 28 with Brazil, Argentina, the US, the EU and Australia, which had substantial trading interest in the products. As a result of the renegotiations, India got to impose tariff quotas on milk, cream powder, maize and mustard oil. It also got to raise tariffs on rice and millet to 80% and 70%, respectively, from 0%. But in return, India had to substantially reduce tariffs on a host of items, including butter, oranges and grapefruit, to compensate the other countries.
Courtesyg: Google (photo)
