Right time for India to resolve trade disputes with US

Last Tuesday, the United States and the European Union agreed to end their trade dispute over government subsidies to aircraft manufacturers Boeing and Airbus. The spirit behind the deal was best summed up by Katherine Tai, the US Trade Representative. “We have resolved these disputes because we are putting away our litigation briefcases,” she said.

Soon after taking over as US President this January, Joe Biden showed his commitment to strengthening multilateral institutions by rejoining the World Health Organization and Paris climate change accord. He also cleared the way for the appointment of Ngozi Okonjo-Iweala as the seventh director-general of the World Trade Organization (WTO). Later, his administration signaled its support for proposals of India and South Africa at WTO for waiver of Intellectual Property Rights for Covid-19 vaccines and got more engaged in the multilateral negotiations on certain contentious issues such as fisheries and e-commerce.

The Biden administration worked with other countries in the G-7 group to reach an agreement on minimum tax of 15 per cent on multinational companies, make available a billion doses of Covid-19 vaccines to poorer countries, and finance build-up of infrastructure in the less-developed countries. The latest move to end the squabble with the EU that has been festering for 17 years raises the hopes that in the coming months, the US will engage more actively with its allies and other likeminded countries, including India, with a view to remove unnecessary irritants, especially on trade related matters.

In 2017, President Donald Trump started a trade war with China that continues under the present administration in the US. He imposed high tariffs on imports of steel and aluminum products from many other countries, including India, the EU, Canada, and Mexico. These countries retaliated by imposing tariffs on several US origin goods. The EU challenged the unilateral decisions of the US at the WTO. Trump went ahead making the dispute settlement process of WTO dysfunctional by refusing to appoint the requisite number of members to its appellate body alleging that it had exceeded its jurisdiction while deciding several cases against the US. 

Many trade analysts and reputed economists are of the view that the disruptive and protectionist policies of the Trump administration have proved to be counterproductive for the US. However, it is difficult for the Biden administration to reverse all such decisions quickly, given the political environment at home. In fact, President Biden has strengthened the ‘Buy American’ clause in many government contracts, despite being part of the plurilateral agreement at WTO that is based on the principle of non-discrimination in matters of government procurement. However, the latest truce on the Boeing-Airbus dispute shows that the intent is to stop fighting with allies on trade matters, although it may be some time before the Biden administration brings down the high tariffs on imports of steel, aluminum products and many other items from friendly countries. For India, this is an opportune time to work towards getting the trade disputes with the US resolved amicably.

The Biden administration can now move forward to strengthen the WTO dispute settlement process by clearing the way for appointment of requisite number of members to its appellate body. Doing so can help create an enabling and conducive environment for constructive discussions in the run-up to and at the 12th Ministerial Conference of WTO to be held this November end at Geneva, Switzerland.

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