India-US to end six outstanding WTO disputes in move to boost economic ties

Both sides will notify WTO's dispute settlement panel within a month that disputes are being bilaterally resolved and urge it to withdraw three cases each, slapped against each other

India and the United States have decided to square-off and end half-a-dozen outstanding disputes at the World Trade Organization (WTO), a decision that aims to strengthen economic ties between both nations.

Both sides will, within a month’s time, notify the WTO’s dispute settlement panel that the disputes are being bilaterally resolved and urge it to withdraw three cases each, slapped against each other.

The development comes against the backdrop of Prime Minister Narendra Modi’s three-day visit to the US at the invitation of President Joe Biden and First Lady Jill Biden.

The resolution of these disputes is a crucial milestone for India-US relations, since Washington and New Delhi are allies not just for strategic reasons. That apart, the US is India’s largest trade and export partner, with bilateral merchandise trade between both nations at $128.78 billion in FY23.

“It is a very big victory for India and is a mutually beneficial arrangement for both countries. PM Modi and President Joe Biden have created a win-win situation for both US and India,” commerce and industry minister Piyush Goyal told reporters on Friday.

Goyal added that by year-end, there will be no trade disputes between India and the US since both sides hope to resolve a pending dispute by then. In that case, Indi had lost a long-standing dispute over poultry imports from the US in 2015.

Apart from the breakthrough in the WTO disputes involving the two nations, India continued to push for restoration of its status under the US Generalised System of Preferences (GSP) programme. According to a joint statement, this could be seen in relation to eligibility criteria determined by the US Congress. India’s beneficiary status–allowing duty-free market access to certain goods under GSP–was withdrawn in 2019.

“Any out-of-court settlement creates a conducive environment for trade to grow because none of the sides are hurt. It’s a good decision. It will not only be favourable in terms of India’s exports to the US, but will give the right signal for overall exports also,” Ajay Sahai, director-general and chief executive officer, Federation of Indian Export Organisations said.

WTO DISPUTE DETAILS

The US won and India had lost disputes on solar cells and modules, certain export related measures against various export incentive schemes, and additional duties on certain products from the US.

On the other hand, India won, and the US lost three cases–countervailing measures on certain hot-rolled carbon steel flat products from India, certain measures relating to the renewable energy sector and measures on steel and aluminium products.

In one of the cases, the US had imposed 25 per cent and 10 per cent import duty on steel and aluminium, respectively, in 2018, under US Section 232, citing national security under former US President Donald Trump. India retaliated with tariffs on 28 items, saying that the earnings through the import duties will equal the losses faced by Indian industry after the US tariffs on steel and aluminium.

Both sides have now firmed up a mutually agreeable solution.

India has agreed to remove retaliatory tariffs on seven agricultural products such as lentils, walnuts, apples, and almonds. In return an equivalent value of steel will be allowed to enter the US.

“It’s a package deal, where the US has assured that all the exclusion requests made by Indian exporters–for excluding them under tariffs of US’s section 232. The US has given us an assurance that at least 70 per cent of all such requests of steel and 80 per cent of  all such requests of aluminium applications for products originating from India will be excluded from the additional process of section 232” Goyal told reporters.

“These tariff cuts will restore and expand market opportunities for US agricultural producers and manufacturers.  The resolution also maintains the integrity of the U.S. Section 232 measures,” according to an official statement by the United States Trade Representative (USTR).

In another case, India lost a key trade dispute case with the US in 2019. The WTO ruling had stated that certain export incentive schemes–merchandise exports from India scheme (MEIS), EOU, EPCG, SEZ and DFIS had violated the provisions of the global trade body by giving export subsidies for a wide range of goods such as steel, pharmaceuticals, apparels, among others.

Thereafter, India had to put an end to the MEIS scheme and launched a fresh scheme to ‘support’ exporters and not merely give them subsidies. Since the rest of schemes continue to exist, India thereafter challenged the dispute settlement body’s verdict.

This case will be another significant win for India.

The six WTO disputes that will be terminated:

Disputes initiated by India:

. Countervailing measures on certain hot-rolled carbon steel flat products from India

. Certain measures relating to the renewable energy sector

. Certain measures on steel and aluminium products

Disputes initiated by United States:

. Certain measures on solar cells and solar modules

. Export related measures

. Additional duties on certain products from the United States

Pending dispute;
 

 Measures concerning the import of certain agricultural products (poultry case) initiated by US