India seeks tariff renegotiations at WTO - Pragnya IAS Academy - News Analysis.

India seeks tariff renegotiations at WTO.

• WTO rules allow countries to renegotiate bound rates, or upper tariff limits, for products with substantial interest in exports

• Trade experts said India could be opening another front of renegotiation with member countries on IT products

India has proposed to renegotiate the upper tariff limits on certain items, reportedly information technology products, at the World Trade Organization (WTO) beginning 1 January. The move comes at a time when the Centre has been encouraging domestic manufacturing in select sectors through a production-linked incentive scheme under the Atmanirbhar Bharat Abhiyan.

“India hereby reserves the right under Article XXVIII:5 of the GATT 1994 to modify its Schedule XII, during the next three-year period beginning on 1 January 2021," India’s one-line notification to WTO members said.

WTO rules allow countries to renegotiate bound rates, or upper tariff limits, for products with substantial interest in exports if the country’s applied or current tariff is about to breach the bound rate. The country has to compensate to raise its bound rate to the exporting country through negotiations.

In 1988-99, after India lost the case for quantitative restriction on rice and maize, it had to renegotiate tariffs of such items under Article 28 with Brazil, Argentina, the US, the EU and Australia, which had substantial trading interest in the products. As a result of the renegotiations, India got to impose tariff quotas on milk, cream powder, maize and mustard oil. It also got to raise tariffs on rice and millet to 80% and 70%, respectively, from 0%. But in return, India had to substantially reduce tariffs on a host of items, including butter, oranges and grapefruit, to compensate the other countries.

Trade experts said India could be opening another front of renegotiation with member countries on IT products, including smartphones on which it has hiked duties, believed by many countries to be in violation of the IT Agreement it had signed in 1996 under which tariffs on such products need to be kept at zero. “However, others may not agree to India’s renegotiation offer, though the issue can be dragged on for a few more years," one trade expert said under condition of anonymity. A message sent to the commerce ministry spokesperson seeking a comment did not elicit a response.

Under the programme to promote indigenous manufacturing of mobile handsets, starting from the FY16 budget, India has hiked customs duties in a phased manner on mobile phones and components including chargers, batteries, microphones, receivers, keypads, USB cables, printed circuit board assembly and camera modules. Starting 1 October this year, the government has also imposed a 10% customs duty on the display assembly and touch panel of handsets.

The moves prompted the US, the EU and China to drag India to the dispute settlement mechanism of the WTO. (Source: Livemint)

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India seeks tariff renegotiations at WTO.

India wins solar case against US at WTO - Pragnya IAS Academy - News Analysis

India wins solar case against US at WTO.

• Panel upholds India’s claims that renewable energy subsidies in eight American states violated a core global trade rule
• The renewable energy sector win may help India in settling other disputes with the US
India on Thursday won a major trade dispute against the US at the World Trade Organization, with a dispute settlement panel pronouncing that subsidies and mandatory local content requirements instituted by eight American states breached global trade rules.
In a significant 100-page report, the three-member panel largely upheld India’s claims that subsidies and local content requirement in 11 renewable energy programmes in eight US states violated core global trade rules. The panel also asked the US to ensure that these states are in conformity with trade rules.

India had claimed that the “domestic content requirements and subsidies instituted by the governments of the states of Washington, California, Montana, Massachusetts, Connecticut, Michigan, Delaware and Minnesota in the energy sector" violated several provisions of the Trade-Related Investment Measures (TRIMs) Agreement and Subsidies and Countervailing Measures Agreement.
The panel urged the US to bring the eight states in conformity with US obligations under Article III:4 of “national treatment". Under the national treatment provision, foreign producers must be treated on a par with domestic producers.
Among others, New Delhi had challenged the “renewable energy cost recovery incentive payment programme" implemented by the state of Washington, California’s self-generation incentive programme, Montana’s tax incentive for ethanol production, Michigan’s renewable energy credits programme, Delaware’s solar renewable energy credits and the Made in Minnesota renewable incentive programme.
Citing ‘judicial economy’ (limited resources of the panel to go into all the issues raised by India), the panel said, “In the light of Article 3.8 of the DSU [dispute settlement understanding], the panel concludes that, to the extent that the measures at issue are inconsistent with Article III:4 of the GATT (General Agreement on Tariffs and Trade) 1994, they have nullified or impaired benefits accruing to India under that agreement."
The US can still challenge the panel’s ruling before the Appellate Body (AB); however, the AB itself is feared to have become dysfunctional after 11 December because the US has been blocking appointments to it.
The WTO panel was set up last year to examine whether renewable energy programmes in the US states constituted prohibited subsidies and violated national treatment provisions. India also argued that some of the renewable energy programmes administered by the American states violated core provisions in the TRIMs agreement by insisting on mandatory domestic content requirements.
The ruling contains several “systemic implications" and exposed the illegal measures adopted by the US and its states, said a Geneva-based legal analyst, who asked not to be named. Firstly, it would show the US and its federal states maintain WTO-inconsistent programmes in the renewable energy sector. Secondly, it is a lesson to the US that it should not undermine renewable energy programmes in other countries such as India on grounds that they violate global trade rules when Washington and its federal states adopt much bigger programmes worth billions of dollars that violate global trade rules, the analyst said.
In 2014, the US had launched a similar trade dispute against India’s Jawaharlal Nehru Solar Energy Mission, on the grounds that it included incentives for domestically produced solar cells and modules. WTO’s Appellate Body had upheld the US complaint against India in that case. Thursday’s ruling could provide India the much-needed strategic leverage normally open to WTO members in tit-for-tat trade disputes. At a time when the US is pursuing several trade disputes against India, particularly against the nation’s export-related schemes, a victory in the renewable energy sector could help India in settling other disputes with Washington, the analyst said. (Source: Livemint)


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India wins solar case against US at WTO.

Brazil to challenge India's sugar subsidies in WTO consultation - Pragnya IAS Academy - News Analysis.

Brazil to challenge India's sugar subsidies in WTO consultation.

• Brazil argues that Indian subsidies have caused significant impacts on the world sugar market
• India is poised to overtake Brazil's position as the world's largest producer of the commodity
The Brazilian government on Wednesday asked the World Trade Organization to start a consultation regarding India's sugar industry subsidies, which the South American country says is distorting global trade.
Australia also formalized a similar consultation request challenging the Indian government's subsidies, according to a joint statement from Brazil's foreign relations and agriculture ministries.

Brazil argues that Indian subsidies have caused significant impacts on the world sugar market.
According to the Brazilian government's estimates, India's increased supplies could lead to a drop of as much as 25.5 percent in international sugar prices in the 2018/2019 season.
That would cause losses of up to $1.3 billion for Brazilian exporters alone, the ministries said.
India's sugar production has risen significantly in recent years, with the country poised to overtake Brazil's position as the world's largest producer of the commodity.
In October, Reuters revealed that India is expected to ship sugar for the first time in three years as government subsidies made exports lucrative.
Under WTO rules, if the mandatory consultation fails to produce a satisfactory solution within 60 days, the complainants may request adjudication by a panel.(Source:Livemint)


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Brazil to challenge India's sugar subsidies in WTO consultation

WTO sets up dispute panel on India-US case on export subsidies - Pragnya IAS Academy - News Analysis.

WTO sets up dispute panel on India-US case on export subsidies.

The World Trade Organisation's dispute settlement body has set up a panel to examine the US complaint against certain export-subsidy measures by India as both the sides failed to resolve the issue at consultation level, an official said.

In March, the US dragged India to the global trade body's dispute settlement mechanism over export subsidies, saying that these incentives were harming the American companies.
"The process of composition of dispute panel is over. The working procedure and the time table for the panel proceedings has been circulated," the official added.
The US has requested for the establishment of a dispute panel to examine the allegations on India's export incentive measures.
Seeking consultation under the aegis of the 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 complainant can request for a WTO dispute settlement panel to review the matter.
The US has challenged India's export subsidy programmes such as Merchandise Exports from India Scheme in the WTO, asserting that these initiatives harm its companies by creating an uneven playing field.
They have stated that all WTO members, including India, are required to provide subsidies consistent with provisions of the WTO's Agreement on Subsidies and Countervailing Measures, including refraining from providing subsidies contingent upon export performance.
During the consultation process, the US had alleged that India was continuing to grant these export-contingent subsidies and even expanded the scope and scale of the subsidies.
India had stated that it was disappointed that the US chose to move forward with a request for a panel, as it believed bilateral consultations held on April 11 were constructive.
During the consultations, India provided a detailed understanding of the schemes implemented under its Foreign Trade Policy by answering all the questions raised by the US.
India has also said that the schemes identified by the US do not violate India's WTO obligations and are in conformity with all the elements of the agreement.
India's exports to the US stood at USD 47.9 billion in 2017-18, while imports aggregated at USD 26.7 billion during the same fiscal.


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WTO sets up dispute panel on India-US case on export subsidies.

Non-trade issues at WTO, lack of legal experts worry India

India recently indicated that developing nations, including India, are facing a double disadvantage at the World Trade Organisation's (WTO) Dispute Settlement Body (DSB).

Concerns:

These nations are challenged not only by the lack of a sufficient pool of trade law experts to represent them effectively at the DSB but also by certain efforts to bring within the body's ambit non-trade issues such as labour and environment.

Background:

India has been advocating that certain issues, including labour and environment, must be kept out of the WTO's purview and instead be dealt with by the global bodies concerned such as the International Labour Organisation and the United Nations Framework Convention on Climate Change. The developed world, however, is keen that the WTO addresses, what they call, global trade's new challenges, including labour and environment.

The Dispute Settlement Body (DSB) of the World Trade Organization (WTO) makes decisions on trade disputes between governments that are adjudicated by the Organization.