India rules out trade war with U.S. over WTO dispute

US-Challenges-Indian-Export-Subsidies

US challenges India's export subsidy programmes at WTO (Eds: Updating with more inputs) By Lalit K Jha

U.S. Trade Representative Robert Lighthizer recently announced that the United States has requested dispute settlement consultations with the government of India at the World Trade Organization challenging Indian export subsidy programs.

"These export subsidy programs harm American workers by creating an uneven playing field on which they must compete", said Lighthizer.

"The Administration's decision to challenge India's USD7 billion worth of prohibited subsidies is a plain and unmistakable signal that we will not tolerate any failure by our trading partners to live up to their commitments at the expense of usa manufacturers, service providers, farmers, and ranchers", Brady said.

The office of the USTR said export subsidies provide an unfair competitive advantage to the companies that receive them and are prohibited under WTO rules.

India today said it will engage with the U.S. to explain its position on export schemes following America's decision to drag India into the WTO against programmes to incentivise shipments, a top official said today.

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Developed countries have raised issues at different forums that as India has crossed the $1,000 threshold of the per capita gross national income, it is no longer eligible to give export subsidies. However, Teotia said that, "our understanding was that under the WTO provisions, developing countries are provided a time of 8 years to comply". "We will try and understand the basis of their assumptions first", Rita Teotia, commerce secretary said, confirming that her ministry is seeking legal advice to prepare New Delhi's official response on the United States objections.

In its request to hold consultations with India, the first step before legal action, the United States has argued that the incentives violate WTO agreements as India is no longer below the economic benchmark of $1,000 per capita gross national income (GNI).

India's trade deficit in February narrowed to $12 billion from an over a four-year high of $16.3 billion in the previous month, as exports picked up while imports moderated.

"We are hopeful that they would recognise this time-frame and during this time frame, we would commit ourselves and meet our obligations".

Besides, some other countries which achieved the benchmark later, such as Egypt and Sri Lanka, have been allowed the transition period, Indian officials said, and accused the Trump administration of targeting India as part of a strategy focused on pleasing its domestic constituency. The US exports to India amounted to $75 billion so far this year, a healthy rise over last year. Consequently, the multilateral trading body has agreed to set up a panel to examine whether India has complied with the tribunal's ruling. Lighthizer accused India of increasing the size and scope of these programs instead of concluding them. India wants that the reference year should be 2015.

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