Restricting Chinese imports won’t be easy: analysis
Rising border tensions between India and China in the Galwan Valley took a bloody turn when 20 brave Indian soldiers lost their lives in a military skirmish with China. As strategic affairs experts try to uncover China’s Achilles’ heel that India can exploit to tame the dragon, the clamor for an economic boycott of China is growing.
From the point of view of international law, can India impose restrictions on Chinese imports by, for example, revoking China’s most-favored-nation (MFN) state in the World Trade Organization (WTO)? Immediately after the Pulwama terrorist attack last year, in which around 40 soldiers of the Central Reserve Police Force died, India revoked Pakistan’s MFN status in the WTO. So possibly what is goose sauce should be goose sauce.
Article XXI (b) (iii) of the General Agreement on Tariffs and Trade (GATT) allows a member country of the WTO to take measures “that it considers necessary for the protection of its essential security interests in time of war or other emergency. international relations “. The current situation between India and China definitely qualifies as an emergency in international relations. Since this confrontation also involves safeguarding India’s territorial sovereignty, an “essential security interest” is at stake.
The legal challenge for India to present a successful Article XXI case will be to demonstrate that the trade restrictive measure it takes during this emergency vis-à-vis China is “necessary” to address the current security situation. Contrary to popular belief, the words “considering” in Article XXI (b) (iii) do not make the provision self-judging. Although India will have significant leeway in determining what constitutes “necessary” measures, they will be subject to a good faith review. There are two cases in which the WTO panels dealing with national security and defense have stated this. These are the Russia-Transit traffic case involving Russia and Ukraine and the recently decided case between Qatar and Saudi Arabia.
Therefore, to demonstrate that the measure taken is “necessary”, India has to demonstrate two things. First, that India really believes that the measure (eg breaching an MFN obligation) is necessary to protect its essential security interests. Second, as the Russia-Transit case demonstrates, the measure meets the minimum plausibility requirement with respect to the essential security interests in question. In other words, the measure must be related to the emergency in question in order to be feasible for the protection of essential security interests.
In the case of Pakistan, India backtracked on its MFN promise by raising tariff rates to 200% on all Pakistani imports. Although India’s decision to increase tariffs on Pakistani imports was fueled by national security concerns, oddly enough, the notification did not even mention national security. This could be because the decision was made under Section 8A (1) of the Customs Tariff Act, which grants “emergency power” to the Indian government to increase import tariffs if the government is convinced that this is necessary in the given circumstances. But, section 8A (1) does not speak of “national security” as a reason to modify tariff rates; refers to economic emergencies.
Consequently, it will be difficult to accept under WTO law that India really believed that raising tariff rates to 200% on all imports from Pakistan is necessary to safeguard India’s essential security interests. India escaped because Pakistan has not questioned India’s move before a WTO panel. The reason could be that bilateral trade between the two countries is too small.
But using Section 8A (1) to impose trade restrictions on China will be complicated. China in all likelihood will challenge this at the WTO, and India will have a hard time defending its action. If India wants to restrict Chinese imports for national security reasons, it will have to provide a reasonable explanation of why and how to impose trade restrictions on China are “necessary” to defend India’s essential security interests.
The other limiting factor for India is the large amount of bilateral trade between the two countries. With bilateral trade of almost $ 90 billion a year, it is about 45 times more than that with Pakistan. Furthermore, numerous Chinese imports are used as intermediary products in Indian industries ranging from pharmaceuticals, automobiles, and electronic products. Therefore, stopping imports in these will be equivalent to India also losing. From this it is clear: when it comes to India’s deal with Pakistan and China under the WTO, what sauce for goose is definitely not sauce for goose.
Prabhash Ranjan is a senior assistant professor at the Faculty of Legal Studies at the University of South Asia.
The opinions expressed are personal.