Disputes at WTO will end when third parties also relinquish rights

The joint statement of the United States (US) and India, following the meetings of the Indian prime minister with the US president, is heavy on co-operation in the areas of geopolitics, defence, technology transfer, space exploration, movement of natural persons, investment, and so on. However, there is also the decision to end six disputes at the World Trade Organization (WTO) that will interest importers and exporters.

The Dispute Settlement Body (DSB) at the WTO is dysfunctional because the US has blocked the appointment of judges to hear the appeals emanating from the DSB panel decisions.  Both India and the US have ignored ways to revive the DSB but have recognised that there is no point in pursuing the disputes at that forum and that ending the disputes through bilateral talks helps look forward to better trade relations. This is similar to the very familiar situation in India where the parties get fed up with the unending delays in getting justice and prefer ‘out-of-court’ settlements.

Out of seven disputes at the WTO between India and the US, the six disputes that will end relate to three complaints filed by India against countervailing measures on certain hot-rolled carbon steel flat products (DS436),  certain  measures relating to the renewable energy sector (DS510), and certain measures on steel and aluminium products (DS547) taken by the US,  and three complaints filed by the US against certain measures relating to solar cells and solar modules (DS456),  export-related measures (DS541), and additional duties on certain products from the US (DS585) taken by India.

These disputes are at various stages. DS456 has gone through the panel ruling and the appeal stage that went against the US. The US says it has taken necessary steps and is fully compliant with the DSB decisions, but India does not agree. DS520 is at the appeal stage after the US lost its stand on domestic content requirements at the DSB panel rulings.  DS547 is at the final stages of DSB panel ruling. DS456 has gone through the DSB panel ruling and the appeal stage that went against India. India says it has taken necessary steps and is fully compliant with the DSB decisions but the US does not agree. DS541 is at the appeal stage after India lost the case at the DSB panel ruling stage. DS585 is at the DSB panel hearing stage.

In all these disputes, several other countries have also joined in the complaints. So, the agreement between the US and India to end these disputes does not necessarily mean that they will also agree, although that is quite likely. The disputes will end when they also relinquish their third-party rights.

The dispute of much interest to exporters is the one relating to direct export subsidies maintained by India (DS541). Following the adverse DSB panel ruling, India has discontinued the Merchandise Exports from India Scheme (MEIS) and brought in the Remission of Duties and Taxes on Export Products (RoDTEP) scheme. 

The other schemes like Export Oriented Units (EOU) scheme, Special Economic Zones (SEZ) scheme, and Export Promotion Capital Goods (EPCG) scheme continue. 

The other disputes are not that consequential in terms of impact on bilateral trade between India and the US. 

Overall, the leaders of both countries have done well to end these disputes and look ahead. 

---

Email: tncrajagopalan@gmail.com