Indias Trading Partners Threaten To Move Wto Over Phaseout Of
Indias major trading partners have threatened to resort to dispute settlement under the auspices of the World Trade Organisation (WTO) if India fails to soften her stand on removing import curbs during the balance-of-payments consultations to be held in Geneva next week, said diplomatic sources yesterday.
The US team, which arrived in Geneva yesterday, will hold bilateral talks with India prior to the final meetings on June 10-11. The Indian team is already holding preliminary meetings in Geneva.
India has offered to remove all import curbs in three phases. The first phase will end after three years, while the other two phases will end after six and nine years respectively. However, the most sensitive items like agricultural items, consumer electronics and semi-knocked down/completely knocked down kits for cars are proposed to be opened up only after nine years.
In turn, the US, European Union, Australia, Canada and Japan have said that India should remove all curbs within three years. In case India fails to do so, the next stage will be dispute settlement, these countries have threatened.
Sources said the Indian government is firm on its position and is not willing to disinvoke Article 18B which permits nations to impose quantitative restrictions on imports if they face an unfavourable balance of payments position within three years.
The hard positions adopted by India and her major trading partners are initial negotiating positions. It is quite likely that a five-year schedule for phasing out import curbs will finally be agreed upon, said sources.
In March, India had come under considerable pressure from other WTO members to remove quantitative restrictions on consumer durable imports within two to four years.
India is expected to indicate a time-table for phasing out import curbs in June. However, the phasing could become a matter of dispute. If no consensus is reached, India can run into opposition on the phase out plan when it announces it in June, said sources. They added that while a period of two years was negotiable, Indias stand that it needs nine years to phase out all curbs was stretching it.
The ultimate decision of the period will be a function of a number of factors including the importance of India as an emerging market, said sources. The Indian government has also embarked on a simultaneous exercise to renegotiate its tariff bindings in certain areas with the principle suppliers and initial negotiating rights holders in agriculture.