Experts For Amendments In DPEB Scheme To Make It WTO Compatible

New Delhi, May 17: | Updated: May 18 2003, 05:30am hrs
Even as the government has decided to continue the post-duty entitlement passbook (DEPB) scheme during 2003-04, experts feel that some corrections are required to make it compatible with the World Trade Organisation (WTO) rules to avoid the risk of countervailing action by developed countries.

They were speaking at a one-day seminar on WTO Rules & Dispute Settlement Procedures, organised by Indian Council for Research on International Economic Relations (Icrier) in Delhi on Saturday.

Presenting a paper WTO Agreement on Subsidies & Countervailing Measures (ASCM): Need for Clarification and Improvement, Anwarul Hoda, of Icrier, stated that the post-duty entitlement passbook scheme, in its present form, did not impose any obligation on exporters to use imported inputs and, therefore, would become countervailable.

Under the scheme, exporters could take credit of the duty paid on the import content of the products exported, he said.

Fearing that captial goods imports permitted under the export promotion capital goods scheme might also invite countervailing action by advanced countries, Mr Hoda felt that during the World Health Organisation negotiations, they should be included in the list of items which were consumed in the process of export production to the extent of depreciation.

Moreover, the negotiations should ensure that the input-output norms published from time by director-general of foreign trade were developed into a proper system to verify that imported inputs were actually utilised in export production as per the norms, he pointed out.

Mr Hoda said that during the Uruguay Round, India and some other developing countries with a per capita income of less than $1000 were included in the subsidies and countervailing measures agreement.

However, China and certain other developing countries had been excluded from the list as they had not been admitted in the world trade body as members then.

In their case, a eight-year transition period was applied to phase out all export subsidies if their share in the global exports crossed the 3.25 per cent threshold limit.

Mr Hoda noted that delays often took place in refunding of the duty drawback to exporters and in that event, payment of interest must be considered.

Again, the level of subsidies against which countervailing duty could be levied against the Third World might be raised to 5 per cent under Article 27.11 of the Agreement, he added.

RK Parthasarathi, an advocate from Chennai, said that there was no need for verification of duty-free inputs utilised by hundred per cent export-oriented units as the job had been left to be handled by customs officer posted there.