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US drag India to WTO

  • Category
    India & world
  • Published
    16th Jul, 2019

The United States (US) has dragged India to the World Trade Organisation (WTO), requesting dispute consultations on the 'retaliatory duties' imposed by India on 28 US goods.

Context

The United States (US) has dragged India to the World Trade Organisation (WTO), requesting dispute consultations on the 'retaliatory duties' imposed by India on 28 US goods.

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  • The products on which duties were hiked as a tit for tat move include certain kind of nuts, iron and steel products, apples, pears, flat rolled products of stainless steel, other alloy steel, tube and pipe fittings, and screws, bolts and rivets.
  • The duties were hiked as retaliation to the US move to impose the highest customs duties on certain steel and aluminium goods.
  • According to USA, the additional duties on 28 US goods imposed by India "appears to nullify or impair the benefits accruing to the USA directly or indirectly" under the General Agreement on Tariffs and Trade (GATT) 1994.
  • According to India, retaliatory duties are permitted under the WTO's Agreement on Safeguards.
  • To this, the US maintains that its tariffs are not a safeguard measure but were taken under Section 232 of the US Trade Expansion Act of 1962 on grounds of national security and hence, India cannot impose these duties on like products originating in the territory of any other WTO member nation.
  • If the dispute consultations between the two countries fail to resolve the matter then the US can ask the WTO to set up a panel to decide on the matter.

Several Disputes

  • It is not the first time the USA and India had their trade issues settled at WTO.
  • The two countries are at loggerheads at the WTO on other issues. The US has challenged certain export promotion schemes of India.
  • Both the countries are already involved in disputes at the global trade body. The disputes are in the areas of poultry, solar and steel.
  • India has challenged USA's unilateral hike on customs duties on steel and aluminium products.
  • The US has rolled back export incentives from India under its GSP programme and India has imposed higher customs duties on 28 American products including almond, pulses, walnut, chickpeas, boric acid and binders for foundry moulds.
  • India's exports to the US in 2017-18 stood at $47.9 billion, while imports were at $26.7 billion. The trade balance is in favour of India.

Indian disputes at WTO

  • India has had problems with US, Canada, EU and China in the field of global trade.
  • India recently won against US in the Dispute resolution body in the case of ‘domestic content requirement for solar panels’.
  • India along with other developing and least developed countries, namely the G-33 had opposed the Agreement on agriculture (AoA) made in Uruguay round due to its favouring lean towards developed nations. As a result, peace accord has been agreed upon in 2013 for food stocking program without violating the AoA.
  • US pharma industries made reservations against compulsory licensing practice in India which India along with developing nations modified in Doha development round, allowing it.
  • European Union in a concept paper ‘WTO modernization’ criticized WTO for allowing world’s largest and dynamic countries like India, China, Brazil, etc. for claiming special and differential treatment.

WTO

  • WTO is an intergovernmental organization that regulates international trade. It aims at making global trade smooth, predictable and free.
  • The WTO officially commenced on 1 January 1995 under the Marrakesh Agreement, signed by 124 nations ,replacing the GATT, which commenced in 1948.
  • It currently functions as per the consensus principle under which multilateral trade negotiations are conducted called as the Single Undertaking framework.
  • Under it, all major decisions are made by the membership as a whole, either by ministers (who meet at least once every two years) or by their ambassadors or delegates (who meet regularly in Geneva).
  • On the other hand, plurilateral agreements are deals negotiated among a group of like-minded members that are limited to certain sectors of goods or services.
  • It is a global body, mandated to make world trade fair and free. Plurilateral negotiations can potentially encourage regional groupings, allaying the scope of global trade. It can also harm smaller and least developed countries, giving undue advantage to developed nations and powerful trade blocs.
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