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Settling Trade Disputes Through ‘Litigotiation’
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Context
India and the U.S. have managed to settle seven long-standing trade disputes at the World Trade Organization (WTO), demonstrating the power of diplomacy in resolving trade frictions.
The Poultry Dispute
- Origins of the Dispute: Initiated by the U.S. in 2012, this dispute challenged India’s import restrictions on poultry products due to concerns about avian influenza. This dispute, which remained unresolved for over a decade, was the oldest of the seven disputes between the two countries.
- Resolution of the Dispute: After a decade of negotiations, India and the U.S. reached a mutually agreed solution, withdrawing their respective pending WTO cases. As part of the settlement, India dodged a yearly $450 million claim and agreed to reduce tariffs on select products such as cranberries, blueberries, frozen turkey, and premium frozen duck meat.
- Significance of the Resolution: While not the most economically significant dispute for India, its resolution represents a significant diplomatic breakthrough. It demonstrates that despite complicated domestic compulsions, major trading partners can effectively resolve sensitive trade matters through diplomatic channels.
Broader Implications for International Trade
- Amicable Resolutions: The successful settlement of multiple disputes showcases the potential for countries to achieve amicable resolutions, even in complex and contentious cases. It highlights the benefits of prioritizing negotiation over litigation.
- Multilateral vs. Bilateral Approaches: The paralysis of the WTO's Appellate Body since 2019 has necessitated out-of-the-box solutions for trade disputes. This settlement illustrates the viability of bilateral diplomatic efforts within the framework of multilateral litigation.
- Stable Trade Environment: The resolution of these disputes contributes to a more stable international trade environment, reducing the likelihood of prolonged conflicts and promoting smoother economic relations between major trading partners.
UPSC Mains Questions
Q. Discuss the significance of diplomatic negotiations in resolving international trade disputes, with reference to the recent settlement of trade disputes between India and the U.S. at the WTO.
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