Why in news?
The US has challenged in the WTO almost all Indian export subsidy programmes.
What is the complaint?
- The US has filed a complaint at the WTO about India’s export subsidy programmes.
- Programmes - It has challenged practically almost the entire of India’s export programmes.
- The programmes include:
- Merchandise Exports from India Scheme
- Export Oriented Units Scheme and sector specific schemes, including Electronics Hardware Technology Parks Scheme
- Special Economic Zones
- Export Promotion Capital Goods Scheme
- duty free imports for Indian exporters
- As per the US administration, these apparent export subsidies provide financial benefits to Indian exporters.
- The benefits allow them to sell their goods more cheaply.
- It thus claims that the programmes harm American workers by creating an uneven playing field.
- Expansion - It is said that India’s exemption under the WTO’s special and differential provisions for developing countries expired in 2015.
- It is thus alleged that despite the expiry, New Delhi has increased the size and scope of these programmes.
- E.g. India introduced the Merchandise Exports from India Scheme in 2015.
- It is expanded to include more than 8,000 eligible products, nearly double the number of products covered at its inception.
- Exports from SEZs increased over 6,000% from 2000 to 2017.
- In 2016, exports from these zones accounted for nearly 30% of India’s export volume.
What is the dispute settlement procedure?
- The US has sought consultations on the mater in the WTO.
- Consultations are the first step in the WTO dispute settlement process, to arrive at a mutually agreed solution.
- In failing this, the US may request the establishment of a WTO dispute settlement panel to review the matter.
What are the implications of US moves?
- India - The US complaint at the WTO has come as a direct attack on India’s trade regime.
- Notably, it comes on the backdrop of a series of US trade decisions that are grossly in violation of basic WTO norms. Click here to know more.
- If selective tariffs of US are taken to the WTO, there is a good chance that these will be declared violative of the rules.
- But even before India could protest against such selective tariffs, the US has fired the next shot.
- Nevertheless, how far can a WTO ruling deter a trading superpower like the US is highly uncertain.
- WTO principle - The basic concept is that all WTO members are to be treated alike unless they are specifically shown to have violated rules.
- This is being ignored in Trump’s selective tariffs.
- Countries are lobbying to be among the favoured countries of US that escape the impact of the tariffs.
- Trade order - In US's selective tariffs plans, clearly, only certain sectors and certain countries will be targeted.
- This may appear that this is helpful for some other countries, which will avoid being hurt.
- But in the long term, it will ultimately hurt all, though in varied proportions.
- The world seems to be moving to a regime where countries can discriminate against select countries and commodities.
- The trend is largely undermining the international trading system and could potentially lead to a breakdown of the global trading order.
Source: Economic Times, Business Standard
