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27th June 2023 (7 Topics)

India to remove retaliatory customs duties on ‘eight’ US products

Context

During the recent state visit of Prime Minister to United States (US), both countries decided the termination of Six WTO disputes and the removal of these retaliatory tariffs on certain US products.

Background

  • In 2018, the US imposed an import duty of 25 per cent on steel products and 10 per cent on certain aluminium products on grounds of national security.
  • In retaliation, India in June 2019 imposed ‘customs duties’ on ‘28 American products’.                                              

Custom Duty:

  • Customs duty refers to the tax imposed on goods when they are transported across international borders. In simple terms, it is the tax that is levied on import and export of goods.
  • The government uses this duty to raise its revenues, safeguard domestic industries, and regulate movement of goods.

About the move:

  • According to information, India has decided to lift the additional duties on eight American products.
  • As part of the agreement, India will be removing additional duty on chickpeas (10 per cent), lentils (20 per cent), almonds fresh or dried (Rs.7 per kg), almonds shelled (Rs.20 per kg), walnuts (20 per cent), apples fresh (20 per cent), boric acid (20 per cent), and Diagnostic Regents (20 per cent).

The six WTO disputes:

  • Those initiated by India;
    • Countervailing measures on certain hot-rolled carbon steel flat products from India
    • Measures relating to the renewable energy sector
    • Certain measures on steel and aluminium products
  • Those initiated by USA:
    • Certain measures relating to solar cells and modules
    • Export-related measures
    • Additional duties on some products from the US

WTO Dispute Resolution Process: 

There are two main ways to settle a dispute once a complaint has been filed in WTO:

  • Bilateral consultations: Parties find a mutually agreed solution, particularly during the phase of bilateral consultations.
  • Adjudication, including the subsequent implementation of the panel and Appellate Body, reports.
  • The WTO dispute settlement process involves three stages:
    • Consultations between the parties
    • Establishment of a dispute settlement panel if consultations fail
    • Adjudication by panels.

India-US Trade relations:

  • The U.S. has emerged as India's biggest trading partner in 2022-23 on account of increasing economic ties between the two countries.
  • The bilateral trade between India and the U.S. has increased by 7.65% to USD 128.55 in 2022-23 as against USD 119.5 billion in 2021-22.
  • Exports to the U.S. rose by 2.81% to USD 78.31 billion in 2022-23 as against USD 76.18 billion in 2021-22, while imports grew by about 16% to USD 50.24 billion.

World trade Organisation (WTO):

  • WTO came into existence in Uruguay Rounds of 1986-1994 through Marrakesh Agreement in 1995.
  • Members – 164 and together, they constitute 98% of the global trade
  • In 2000, 4th WTO Ministerial led to a new round of negotiation, Doha Development Agenda, which is still in progress.
  • Mandate – to open trade for the benefit for all
  • All decisions are made by consensus.
  • WTO Headquarters is in Geneva, Switzerland. It has no other branch office.
  • Ministerial Conference is WTO’s top level decision making body. It meets once in two years.
  • WTO Agreements:
    • For Goods – Marrakesh Agreement (1995) and Trade Facilitation Agreement ( 2017)
    • For Services – General Agreement on Trade in Services
    • For Intellectual Property - The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
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