China criticizes new Indian mandatory standards for Chinese toys before TBT Committee
The Economic Times reported yesterday that China has raised the issue of the mandatory safety standards imposed by India on imported Chinese toys before the WTO Committee on Technical Barriers to Trade.
In its complaint to the WTO, China has alleged that India’s quality checks violate the condition of “national treatment” laid down under WTO’s trade rules as they did not apply to toys manufactured in India or imported from any other country.
In its submission to the WTO committee on technical barriers to trade, China pointed out that since the restrictions apply only to Chinese toys, it could be viewed as a general ban on and a discriminatory measure against Chinese toys.
This breached a series of fundamental principles embodied in the WTO agreement, including that of most favoured nation treatment (every member country will be treated on a par with other member countries), and national treatment (product from a member country will be given the same treatment as that given to a product made locally), along with provisions of technical barriers to trade (TBT) agreement.
China also pointed out that India did not inform WTO about the restrictions, a procedure necessary under the transparency obligations of TBT agreement.
“China strongly requests that India revoke its discriminatory and WTO-inconsistent restriction on Chinese toys immediately,” the submission stated.
So China is alleging that even the revised Indian notification violates both MFN and national treatment. Further, it violates the notification requirement in the TBT agreement. For more background, see earlier posts on this subject under the category –public health. See http://indiainthewto.wordpress.com/2009/03/02/indian-government-relaxes-ban-on-chinese-toy-imports/
Why did the Indian government not use Clause 2.10 of the TBT agreement permitting the issue of safety standards in urgent cases with post-facto notification to the WTO secretariat and other members? Such a notification requires the statement of objectives and the rational for the standards. India will probably argue that these are international standards not requiring notification, but the application of these standards exclusively to imports from China does raise potential violations of MFN and NT.
The Indian authorities could have avoided a lot of trouble if only they had also followed the letter of WTO rules in this matter. The flexibility to take action against imports for safety reasons is fully available, but the Indians seem to have messed up on procedure. Is this an example of lack of capacity in Indian government institutions to use the WTO rules effectively? Why do they not consult lawyers more?
The Hindu meanwhile has an interesting take on the matter:
China is likely to convey its concern to India over New Delhi trying to restrict import of Chinese goods, even though Beijing has not "yet" dragged its neighbour to the World Trade Organisation on the issue.
Chinese Vice Minister of Commerce Zhong Shan is expected to convey his country’s strong resentment over India resorting to protect its industry against imports from China, when he meets Commerce Secretary G K Pillai here this week, sources said.
"We have nothing on this yet," WTO spokesperson said in an e-mail from Geneva when asked whether China has lodged any formal complaint against India. China was upset over India slapping a ban on import of Chinese toys on January 23, which was partially eased within six weeks, provided the toys conformed to international health and safety standards.
The official Chinese media had reported that the country was mulling to drag India to WTO for contesting the ban. However, Mr. Pillai is expected to confront Mr. Zhong with data showing surge in imports from China.
While the bilateral trade has seen a sharp rise in the fiscal 2008-09, it is highly skewed in favour of China. In 2007-08, India’s exports to China stood at USD 10.83 billion, while imports was USD 27.11 billion.
So why would Indian Commerce Secretary talk to the Chinese about surging imports in a matter to do with safety issues? To be fair, the discussions between the Indian Commerce Secretary and the Chinese Vice Minister of Commerce will likely cover all the recent trade tensions between the two countries. And the discussion of import surges will probably feature in that context.
I’m not entirely certain that its India’s failure to notify its import ban under the TBT Ag that the Chinese are complaining about. After all, failure to notify, even if it were to form the basis for a dispute request, would at best result in a ruling requiring India to notify its law. Hardly the kind of relief that the Chinese are looking for.
I wouldn’t characterize this as being about procedural muddling (although there is plenty of that). Instead the crux of the issue appears to be a TBT Article 2.1 violation. This captures both the MFN and National Treatment principles. The Chinese would contend that India must apply its ban to all WTO Member countries and must require its own toy manufacturers to comply with the same standards.
The question of whether the Indian ban is based on an international standard becomes relevant only if the standard itself is challenged as being more trade restrictive than necessary under Article 2.2 of the TBTA. The two legal areguments are distinct.
Samir
March 18, 2009 at 3:47 pm
Hi Seema,
This is an interesting case, thanks for your reports. I think it would be a very generous assumption that the problem is an error in the notification procedure. Do you know precisely which standards the Indian government says have been breached? The Indian notification does not seem to have appeared (yet) on the docsonline.wto.org/ database (notifications to January 2009 are available).
Peter Gallagher
March 19, 2009 at 2:01 am
Samir; you mis-describe my post.
The Economic Times is saying that China has complained to the TBT committee about the lack of notification. I have not seen the Chinese submission (as it is not yet online) so I can’t verify this. If the Chinese have raised a notification issue, then TBT clauses 2.9 and 2.10 get attracted as these impose notification obligations.
Second – I say in my post and have said in my earlier posts and in fact in a comment at the IPE blog that the notification does potentially violate NT and MFN. And the Economic Times report above also says that the Chinese have complained on these two grounds as well. (and I have quoted it in my post)
There has been much procedural bungling. The first notification was issued with no reasons and imposed a full ban. It was later revised to allow imports that met international safety standards, but still the remaining problems with the measure were not resolved. These included MFN and NT violations, and a potential argument that the measure was more trade restrictive than necessary.
You are I think mistaken in your last comment. The second notification clearly and on the face of it applies international standards as it refers to them by name. My post was wondering that if China has raised a notification issue (see the Economic Times report) then India could argue that the notification requirements under 2.9 and 2.10 applied only if the standards adopted were different from international standards.
Seema Sapra
March 19, 2009 at 9:09 am
Peter – you can find the two notifications on my blog at http://indiainthewto.wordpress.com/2009/02/07/text-of-indian-notification-banning-imports-of-toys-from-china/ and at http://indiainthewto.wordpress.com/2009/03/02/indian-government-relaxes-ban-on-chinese-toy-imports/
These notifications can also be found on the website http://dgft.delhi.nic.in/ under the notifications icon.
I am also creating a separate category for my posts on this issue.
Seema Sapra
March 19, 2009 at 9:18 am