India may have to End Export Promotion Plans If WTO Objects

India may have to End Export Promotion Plans If WTO Objects

Panel set up by WTO’s Dispute Settlement Body to look expeditiously into US complaint on subsidies

India’s export promotion programmes have come under the global trade watchdog’s scanner and would need to be stopped if found prohibited as per the World Trade Organisation (WTO) norms. The WTO on Monday referred a US complaint against India’s export promotion schemes to the Dispute Settlement Body (DSB) by establishing a panel to look expeditiously into the matter.

Failing to find a mutually agreed solution in the stipulated 30 days to India’s export promotion programmes, which Washington claims harm American workers, the US had requested the establishment of a panel more than 10 days ago.“A panel has been established in the DSB under accelerated timelines of the agreement on subsidies and countervailing measures (SCM) on our export-related measures,” an official privy to the details told ET.

The SCM agreement provides for accelerated procedures with several shorter time-periods. Further, the panel has to circulate its report to all WTO members within 90 days of the date of its composition and the establishment of its terms of reference.

“This means we have smaller time period for compliance and if any subsidies are found to be prohibited, then we will have to stop them as soon as possible. This is difficult,” said an expert on WTO issues.India can appeal to the Appellate Body in case the findings of the panel’s report are not in its favour. However, India would have to scrap whichever schemes the Appellate Body finds violating norms.

Pegging the quantum of subsidies at USD 7 billion, the US had in March dragged India to WTO for violating commitments under the ASCM in five of its most used export promotion schemes—the export-oriented units scheme and sector-specific schemes including electronics hardware technology parks scheme, merchandise exports from India scheme, export promotion capital goods scheme, special economic zones and duty-free import authorisation scheme.It alleged that despite the expiry of India’s exemption under the WTO’s special and differential provisions for developing countries in 2015, Delhi has increased the size and scope of these programmes.

The agreement envisages the eventual phasing out of export subsidies and provides eight years for graduating countries (least developed and developing), which cross the USD1,000 mark at 1990 exchange rate to phase out export subsidies. Under existing WTO rules, a country can no longer offer export subsidies if its per-capita GNI has crossed USD 1,000 for three years in a row.

The Economic Times, New Delhi, 30th May 2018