Subsidy: US Challenges India’s ‘Unfair’ Export Subsidy Programs at WTO

by March 16, 2018 0 comments

The United States has declared its challenge to Indian export subsidies at the World Trade Organization on Wednesday, stating that they hurt US companies by creating an uneven playing field. Listing a number of things, Robert Lighthizer, US trade representative mentioned that “they provide financial benefits to Indian exporters that allow them to sell their goods more cheaply to the disadvantage of American workers and manufacturers.

In a statement, Lighthizer said the US has requested dispute settlement consultations with the Government of India at the WTO challenging the Indian export subsidy programmes.

“Consultations are the first step in the WTO dispute settlement process,” the statement said, adding: “If the United States and India are not able to reach a mutually agreed solution through consultations, the United States may request the establishment of a WTO dispute settlement panel to review the matter.”

The programmes challenged by the US include the Merchandise Exports from India Scheme; Export Oriented Units Scheme and sector-specific schemes, including Electronics Hardware Technology Parks Scheme; Special Economic Zones; Export Promotion Capital Goods Scheme; and a duty-free imports for exporters programme.

“USTR will continue to hold our trading partners accountable by vigorously enforcing US rights under our trade agreements and by promoting fair and reciprocal trade through all available tools, including the WTO,” Lighthizer said.

“Through these programmes, India provides exemptions from certain duties, taxes, and fees; reduces import duty liability; and benefits numerous Indian exporters, including producers of steel products, pharmaceuticals, chemicals, information technology products, textiles, and apparel,” the top trade official said in his statement.

Citing Indian Government documents, Lighthizer went on to say that thousands of Indian companies are receiving benefits totaling over $7 billion annually under these programmes.

“Export subsidies provide an unfair competitive advantage to recipients, and WTO rules expressly prohibit them,” the USTR statement said, noting: “A limited exception to this rule is for specified developing countries that may continue to provide export subsidies temporarily until they reach a defined economic benchmark. India was initially within this group, but it surpassed the benchmark in 2015. India’s exemption has expired, but India has not withdrawn its export subsidies.”

The statement went on to accuse India of increasing the size and scope of these programmes. Citing the Merchandise Exports from India Scheme, introduced in 2015, it said the scheme has rapidly expanded to include more than 8,000 eligible products, nearly double the number of products covered at its inception.

As for Special Economic Zones, it said exports from these zones have increased “over 6,000 percent from 2000 to 2017, and in 2016, exports from Special Economic Zones accounted for over $82 billion in exports or 30 percent of India’s export volume”.

Exports from the Export Oriented Units Scheme and sector-specific schemes, including Electronics Hardware Technology Parks Scheme, increased by over 160 percent from 2000 to 2016, it said.  

Writer: S Rajagopalan

Courtesy: The Pioneer

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