India on Thursday said it will engage with the US to explain its position on export schemes following America’s decision to drag India into the WTO against programmes to incentivise shipments, a top official said today.
America yesterday challenged India’s export subsidy programmes such as Merchandise Exports from India Scheme in the World Trade Organisation (WTO), saying these initiatives harm the US companies by creating an uneven playing field. They have sought consultations with India under the aegis of the global trade body’s dispute settlement mechanism.
“The US has asked for a consultation process, we will engage fully in the process and we would make sure that we make our position known to the US. We expect that they would also engage with a positive spirit with an effort to resolve a dispute with a friendly country,” Commerce Secretary Rita Teaotia told reporters here.
Developed countries have raised issues at different forums that as India has crossed the USD 1,000 threshold of the per capita gross national income (GNI) for three consecutive year, it is no longer eligible to give export subsidies. The secretary said that a clause of WTO’s Agreement on Subsidies and Countervailing Measures provides a period of eight years for graduating countries (crossing the USD 1,000 mark) to phase out export subsidies.
“Our presumption is that India also has a similar period of eight years to graduate out of the subsidy regime and this is what we would be placing before the US. We are hopeful that they would recognise this time-frame and during this time frame, we would commit ourselves and meet our obligations,” she said. There is a confusion over the year from which the eight-year period will be calculated.
India wants that the reference year should be 2017 (rpt) 2017. She added that India has not violated any WTO norms and it would soon respond to the USA’s application. A WTO member country gets 60 days to respond.
According to the US, Indian subsidy programmes harm American workers by creating an “uneven” playing field. These programs are: 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 and Duty Free Imports for Exporters Programme. Seeking consultation under the aegis of WTO is the first step of dispute settlement process.
If the two nations are not able to reach a mutually agreed solution through consultation, the US may request for a WTO dispute settlement panel to review the matter. India has already lost two cases in WTO, including on poultry and solar sector.
In 2016, India also dragged the US to WTO against the policies of eight American states for the renewable energy sector, alleging that the domestic content requirement norms are inconsistent with global trade rules. Besides, the country has filed a complaint against American decision to impose high fees on temporary working visas.
India’s exports to the US stood at USD 42.21 billion in 2016-17, while imports aggregated at USD 22.30 billion during the same fiscal.
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