WTO Challenge on India's Export Programmes

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