The government may have to end export subsidies within the next nine months, if it loses the trade dispute registered by the American Government at the World Trade Organization (WTO).
In March, US trade representative Robert Lighthizer’s office had challenged India at the WTO over its export promotion schemes alleging that these exemptions are against the WTO rules as they benefit Indian exporters at the cost of others.
“Timelines for a prohibited subsidy dispute are normally half of the other disputes. The only way it could go on beyond nine months is if the issue gets appealed. We don’t know how the current logjam at the Dispute Settlement Body (DSB) is going to affect it,” said Abhijit Das, head of the Centre for WTO Studies to the media.
Initially, the commerce ministry had said that post the US complaint, it had 60 days to respond and settle the dispute through consultation, as per the WTO rules. However, it now appears the allocated time for initial consultation, as well as for every single level of the dispute process, will be cut by half. As such, the government has only 30 days for consultations. In case the dispute remains unresolved, the US can seek establishment of a panel. This panel will have about six months to come up with a report. In case India wants to appeal after the submission of the report, the appellate body would have about 60 days to decide the matter, according to media reports.
India has argued the law invoked by the US — the Agreement on Subsidies and Countervailing Measures (ASCM) — allows it a window of eight years to phase out these subsidies. ASCM which was framed at the time WTO was set up, aims at gradually lowering and finally prohibiting export subsidies being provided by various member countries and make global trade equitable. Notably, ASCM provides a limited exception to specified developing countries that may continue with export subsidies till they reach a defined economic benchmark of $1,000 per capita income.
In 2017, India however was informed by the WTO secretariat that it had crossed the threshold in 2015, and hence is no longer in the list of excepted countries.
The US accuses India of deliberately bending the ASCM rules to boost its shipments by continuing with its export subsidies.
India however argues that “Article 27 of the agreement also provides for special and differential treatmentand points to the provision of eight years under the rules to countries who have crossed the threshold for bringing down export subsidies.
However, trade experts feel India’s position is weak, as there is no historical precedent of a country winning a reprieve from the WTO on this matter. Moreover, India’s argument is based on an earlier argument that hasn’t been accepted from 2011 till now by a single nation.
What might help India buy some time is the US itself, as the Trump government continues to block the appointment of appellate body members who are effectively chosen as judges by the DSB, the principal body tasked with arbitration between nations.
Source: Media reports