Call it the chicken and the leg case. Around three years after the US won a case at the World Trade Organisation (WTO) against Indian curbs on supplies of certain poultry items and days before the scheduled talks between assistant US trade representative (USTR) Mark Linscott and senior commerce ministry officials here, a small consignment of American chicken legs landed in India last week, sources told FE.
“The supply reached India by air on Friday,” one of the sources said. The supply, although not substantial, marks an important chapter in Indo-US trade tussles and dispute resolution, and paves the way for more such consignments in future that are expected to initially cater for global food chains like McDonald’s, KFC and Pizza Hut. The assistant USTR arrived for talks with India on Monday.
The import of American poultry is important as the US sought the WTO authorisation in 2016 to slap trade retaliatory measures worth $450 million on Indian goods, alleging India’s non-compliance of the WTO ruling. Regular supplies of American poultry products will weaken the US claim of non-compliance by India. It’s not clear yet if the US will formally withdraw its plea now. On its part, India has been insisting that it has issued all necessary notifications to fully comply with the WTO ruling.
In April last year, India even requested the WTO to set up a panel to assess its compliance. The chair of the compliance panel, formed after India’s request, informed the WTO’s dispute settlement body (DSB) in November last year that, due to the complexity of the issues in dispute, the panel expected to issue its final report to the parties by the end of May 2018.
Opinion was divided on the impact on the domestic industry. “The supplies are too small to make any meaningful impact on the local poultry industry,” said another source. Even in the best of the years, supplies of American poultry products haven’t even touched $2 million, according to data from the Agricultural and Processed Food Products Export Development Authority (Apeda).
The domestic industry, however, is concerned about American supplies flooding the market.
In February, Vasant Kumar Shetty, convener of All India Broiler Coordination Committee, said chicken leg imports from the US would hit the local business by 25% in this segment, although the dressed chicken market in India is 3-5% of its total poultry market. Moreover, the move could impact maize and soya bean growers as around 40% of these commodities are used as feed by the poultry industry.
According to Apeda, India produced almost 3.1 million tonnes of poultry meat in 2016-17, against 2.9 million tonnes in the previous year. It produced 2.3 million tonnes in 2011-12 before the DSB at the WTO set up a panel in June 2012 at the US request to examine the curbs. Just five states — Maharashtra, Tamil Nadu, Haryana, West Bengal and Uttar Pradesh — account for more than 60% of the country’s total chicken production.
As for the WTO case, the appellate body of the multilateral institution had in June 2015 upheld an earlier panel ruling and viewed that Indian ban on the imports of poultry meat, eggs and live pigs from the US, imposed purportedly to avoid the outbreak avian influenza, was “inconsistent” with international norms. On December 8, 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.
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 believed a delay of a few days didn’t matter much and that intent was more important than the exact date of compliance — an argument the US didn’t buy. However, analysts have pointed out that while India has never violated a WTO ruling, it’s the US which has a poor track record of such compliances.