India and the US are heading for another face-off at the World Trade Organization (WTO).
India and the US are heading for another face-off at the World Trade Organization (WTO). As efforts to settle a dispute amicably fail, India has approached the WTO to set up a panel to decide whether it has complied with the multilateral body’s ruling on a poultry case in 2015 that went in favour of the US, sources told FE. The dispute settlement body (DSB) of the WTO will take up India’s request in a meeting on Monday, said the sources.
The move is important, as the US last year sought the WTO authorisation to slap trade retaliatory measures worth $450 million on Indian goods, alleging India’s non-compliance of the WTO ruling. India contested the claim, saying it had issued necessary notifications to fully comply with the order.
Despite talks between the two countries on different occasions, the US hasn’t yet withdrawn from seeking trade retaliation. This has prompted India, the sources said, to request the WTO to set up the panel, which will examine two key issues: whether the measures to comply with the ruling exists and whether the compliance is consistent with the WTO norms.
The latest face-off is one in a series of disputes both the countries have been embroiled in, in recent years. Apart from the poultry case, India also lost to the US on a subsidy programme for domestic solar panel manufacturers in January last year. Looking to use the WTO window more vigorously to settle its trade disputes, India, too, has dragged the US to the multilateral forum on trade-restrictive steps on visa for working professionals. It has also approached the WTO to set up a panel to adjudicate on the issue of “illegal subsidy programme” adopted by the US for its own solar companies.
As for the poultry case, the WTO’s Appellate Body had in June 2015 upheld an earlier panel ruling and viewed that Indian ban on the imports of poultry meat, eggs and live pigs products from the US, imposed in the wake of avian influenza in 2011, was “inconsistent” with international norms. On 8 December 2015, India and the US informed the DSB that they had agreed that the reasonable period of time for India to implement the rulings will be 12 months (from the date of adoption of the WTO’s Appellate Body and panel reports). Accordingly, that time was set to expire on June 19, 2016.
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On July 8 last year, 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. Indian officials feel it’s the intent which is more important than the exact date of compliance—an argument the US hasn’t bought.
Analysts said if the panel endorses India’s compliance argument, the US’ case for trade retaliation will fall flat. However, as Anwarul Hoda, a former deputy director general at the WTO and current chair professor for trade policy at Icrier, said, if the panel finds India non-compliant, the US will be at liberty to choose the products it will impose the tariff restrictions on. And usually, the winning party picks the most sensitive items to impose restrictions, Hoda had told FE earlier. But 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 feel a delay of only a few days in the notification shouldn’t be seen as India’s defiance of the WTO ruling, as the intent of compliance was always there. Importantly, 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 apprehends that with India lifting the curbs US exports of chicken meat to this country could be over $300 million a year, which will rise in coming years thanks to a pick-up in the consumption of protein-based items. 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. However, so far, hardly any American poultry products have come into India since the notification was issued in July, partly due to the fact that India’s imports of poultry products haven’t picked up in recent years.