India and US play chicken at World Trade Organisation

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Published: July 26, 2016 6:49:32 AM

India is hopeful of an amicable resolution to the trade dispute with the US on the import of American poultry products at the World Trade Organisation (WTO), official sources said.

India is hopeful of an amicable resolution to the trade dispute with the US on the import of American poultry products at the World Trade Organisation (WTO), official sources said. The US had recently sought the WTO’s authorisation to slap trade retaliatory measures worth $450 million on Indian goods, alleging India had failed to comply with the WTO’s ruling on American poultry. India has contested the claim, saying it has fully complied with the order.

Officials of the two countries held a meeting on July 20 via a video-conferencing facility to help resolve the matter. “The US side sought clarifications on certain issues which were adequately addressed by the Indian side. We maintain that

we have already complied with the WTO ruling and the issue should be resolved,” a senior government official said.

The Indian side was represented by officials from the departments of animal husbandry and commerce.

The WTO’s appellate body had, in June 2015, upheld an earlier panel ruling and viewed the Indian ban on the imports of poultry meat, eggs and live pigs products from the US, imposed in the wake of the avian influenza outbreak in 2011, as “inconsistent” with international norms. India had a year’s time (till June 19) to comply with the verdict.

On July 8, the department of animal husbandry, dairying and fisheries had issued a notification, detailing new norms for the import of poultry and poultry products, which, India insists, makes the country compliant with the WTO ruling.

Earlier this month, the chairperson of the WTO’s dispute settlement body (DSB) referred the matter to an arbitration panel to decide whether the US was entitled to slap more duties on Indian merchandise exports to that country.

Anwarul Hoda, a former deputy director general at the WTO and current chair professor for trade policy at Icrier, observed that if the panel finds India non-compliant, the US will be at liberty to choose the products on which to impose tariff restrictions. “In such cases, countries that win the ruling usually pick the most sensitive items to impose restrictions,” Hoda said. However, the panel will also decide on the extent of potential losses (faced by the US), and any retaliatory measures by the US have to be commensurate with that.

Some analysts say a delay of only a few days in the notification is unlikely to weaken India’s intent of compliance with the order. While India has consistently

complied with WTO rulings over the years, it is the US that has a poor record on such compliance, they argued.

The domestic poultry industry estimates that with India lifting the curbs US exports of chicken meat to this country could be over $300 million a year, which will only rise in coming years thanks to a pick-up in the consumption of protein-based items.

The domestic poultry industry fears that American chicken meat would flood the local market and hurt local businesses. It also fears global food chains like McDonald’s and KFC will opt for such “cheap” American products, which could cost a bulk consumer almost half the price of the domestic chicken legs.

A senior government official, however, sought to allay such fears, saying the domestic industry already enjoys adequate protection as India imposes a 100% basic customs duty on chicken legs. Also, it will be the middlemen who will be affected by the lifting of the restrictions, as they corner a bulk of profits, rather than the farmers. Moreover, imports would increase competition helping consumers get protein foods at a cheaper rate.

Apart from the poultry case, India also lost to the US on a subsidy programme for domestic solar panel manufacturers in January. Looking to use the WTO window to settle its trade disputes, India, too, has dragged the US to the multilateral forum, alleging the latter had resorted to trade-restrictive steps of raising professional visa fees which would substantially increase the annual visa costs of Indian IT companies. It’s also gearing up to challenge the US’ subsidy programme for its own solar companies at the WTO.

Meat of the matter

US alleges India failed to comply with the WTO’s ruling on American poultry

Seeks authorisation for retaliatory measures worth $450 m on Indian goods

India contests claim,  says has fully complied with the order

Officials of the two countries met on July 20 via video-conferencing to help resolve the matter

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