Indian auto policy 8212; US to move WTO

WASHINGTON, MAY 1: United States on Saturday said it would haul India to the World Trade Organisation WTO over New Delhi's auto policy....

WASHINGTON, MAY 1: United States on Saturday said it would haul India to the World Trade Organisation WTO over New Delhi8217;s auto policy. Indian rules that at least some parts of an automobile assembled in India must be made in the country are viewed by the US as violative of WTO requirements, the US trade representative USTR said.

The Clinton administration will be taking the same measures with Brazil and Mexico which have similar rules to ensure that they have a viable local auto industry. USTR is also seeking bilateral talks with India over the issue of customs valuation, holding that the present rules violate WTO rules.quot;The United States will request WTO consultations with India regarding measures affecting the automobile sector that the United States considers are inconsistent with the WTO agreement on trade-related measures,quot; USTR said in a press release.

USTR explained further in a second press release that the step is being taken under the WTO agreement on trade-related investment measuresTrims. It said, quot;the United States will request consultations with India on its new auto policy. Last year, India implemented new measures governing investments in the auto industry.

quot;All new and existing firms wishing to operate auto manufacturing investments in India are required to sign a standardised agreement with the IndianGovernment that contains local content and forex balancing requirements. Indian programme would inhibit the free flow of trade and investment and is inconsistent with India8217;s obligations under the WTO agreement on Trims,quot; it added. According to the American Automobile Manufacturers Association, the approximate size of the vehicle market in India in 1998 was 604,000 units. A large portion of vehicles sold in India are produced locally. Auto parts sales into India are also reduced by these measures, the release said.

quot;The United States,quot; USTR said, quot;is also prepared to request consultations with those countries that engage in customs practices which, contrary to the WTO customsvaluation agreement, undermine the benefits of market access commitments. USTR is closely examining reports of non-compliance with the valuation agreement, particularly in those countries with current obligationsquot;.