India-US decision to end WTO disputes to boost bilateral trade: experts

The decision by India and the US to end their six trade disputes at the World Trade Organization (WTO) will help boost mutual trade and strengthen economic ties, experts said. They also said that both countries should set up a proper and strong mechanism to resolve trade-related issues bilaterally so that they don’t have to file complaints with the WTO.

India and the US have agreed to end six trade disputes at the World Trade Organization, while New Delhi will also scrap retaliatory tariffs on 28 American products including almonds, walnuts and apples. This comes as part of Prime Minister Narendra Modi’s state visit to the United States at the invitation of President Joe Biden and First Lady Jill Biden.

International trade expert Biswajit Dhar said it was a positive announcement and would help boost bilateral trade between the two countries.

“We now have to see what compromises there are between the countries to finally end these trade disputes.” The announcement looks positive overall. A strong mechanism needs to be established so that such disputes do not arise and can be resolved bilaterally through mutually agreed solutions,” Mr Dhar said.

Ajay Sahai, director-general of the Federation of Indian Export Organizations (FIEO), welcomed the announcement and said it will help boost India’s exports to the US, which is New Delhi’s largest trading partner. “It’s a positive development. We have been waiting eagerly for this decision. This will give a boost to India’s exports to the US,” Mr Sahai said.

Another expert said that this decision would help strengthen the 2+2 dialogue between India and the US. The Indian Institute of Plantation Management Bengaluru (IIPMB), director Rakesh Mohan Joshi, also said such decisions would help further promote trade.

The six disputes include three from India and as many from the US.

These include countervailing measures on certain hot-rolled carbon steel flat products from India, certain measures related to solar cells and modules, renewable energy measures, export-related measures, certain measures on steel and aluminum products, and additional tariffs on some US products

According to trade experts, both countries can resolve the disputes on mutually agreed terms and later inform the Geneva-based WTO about it.

In 2018, the US imposed import tariffs of 25% and 10% respectively on certain steel and aluminum products for national security reasons. In retaliation, India imposed tariffs on 28 American products in June 2019, including chickpeas, lentils, almonds, walnuts, apples, boric acid and diagnostic reagents. India had also filed a complaint against the US at the WTO over the imposition of these tariffs.

On April 12, 2012, India requested consultations with the United States regarding the imposition by the United States of countervailing duties on certain hot-rolled flat carbon steel products from India. New Delhi had claimed that the countervailing duty investigation and related measures were inconsistent with WTO trade standards.

On February 6, 2013, the US requested consultations with India on certain actions by India regarding domestic content requirements under the Jawaharlal Nehru National Solar Mission for solar cells and solar panels. America claimed that the measures appeared inconsistent with global trade regulations.

Similarly, on September 9, 2016, under the auspices of the WTO, India requested consultations with the US on certain US measures regarding domestic content requirements and subsidies granted by the state governments of Washington, California, Montana, Massachusetts, Connecticut, were introduced. Michigan, Delaware and Minnesota in the energy sector.

On March 14, 2018, the US requested consultations with India on certain alleged export subsidy measures by New Delhi under the Merchandise Export from India Scheme (MEIS), Export Oriented Units (EOU), Electronics Hardware Technology Parks (EHTP), Special Economic Zone (SEZ ) and Export Promotion Capital Goods (EPCG). The WTO Disputes Body ruled against India and New Delhi in 2019 and appealed the ruling to the Appellate Body.

On May 18, 2018, India requested consultations with the US on certain measures imposed by America, allegedly to adjust US steel and aluminum imports. India had claimed that these measures appeared to be incompatible with WTO rules. Similarly, on July 3, 2019, the US requested consultations with India under the WTO Dispute Settlement Mechanism on the imposition of additional tariffs by India on certain products originating in the US.

The US is India’s largest trading partner. In 2022-23, bilateral trade in goods increased to $128.8 billion from $119.5 billion in 2021-22.

Under WTO rules, a member country can lodge a complaint with the multilateral body in Geneva if it believes a particular trade measure violates the norms. Bilateral consultations are the first step in resolving a dispute. If both sides fail to resolve the issue through consultation, either side may seek to set up a dispute resolution body. The panel’s decision or report may be appealed to the WTO’s Appellate Body.

The Appellate Body does not function because there are differences between member countries in the appointment of its members. Several disputes are already pending with this body. The US blocks the appointment of members.

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