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India may Move to WTO, if US denies Preferential Benefits

 

India could approach the dispute settlement body of the World Trade Organization (WTO) if the US denies it preferential benefits in retaliation for the barriers Washington claims its exports face. As per US norms, a beneficiary country must meet 15 eligibility criteria established by the Congress, including combating child labour, respecting internationally recognized worker rights, providing adequate and effective intellectual property protection, and providing the US with equitable and 
reasonable market access in order to qualify for GSP.

United States has actively sought bilateral and multilateral opportunities to open India’s market, and the government of India has pursued ongoing economic reform efforts. Nevertheless, U.S. exporters continue to encounter tariff and nontariff barriers that impede imports of U.S. products into India.

The Indian government has identified 109 commodities that must be certified by its National Standards body, the Bureau of Indian Standards (BIS).  Another agency, the Food Safety and Standards Authority of India (FSSAI) established under the Food Safety and Standards Act, 2006 as a statutory body for laying down standards for articles of food and regulating manufacturing, processing, distribution, sale and import of food. The idea behind these certifications is to ensure the quality of goods seeking access into the market, but many countries use them as protectionist measures.

India, at present, has biggest dairy industry in the world. The dairy sector contributes majorly to the agricultural sector of the country. In the past 10 years, India has become one of the largest producers of milk and value-added milk products in the world. The US wants to review India’s eligibility based on petitions filed by its dairy industry and medical devices industry “given Indian trade barriers affecting US exports in those sectors”. The Generalized System of Preferences (GSP) is a trade programme instituted on January 1, 1976 to promote economic growth in the developing world by allowing duty-free entry to select goods.  As of now, nearly 129 countries benefit from this preferential duty arrangement for about 4,800 goods.  Experts say India will have a case if the US takes any unilateral action. The Generalized System of Preferences (GSP) is a non-reciprocal programme—when developed countries grant trade concessions to developing countries, they should not expect matching offers in return. Hence, the benefits can’t be unilaterally terminated on such basis.   India could approach the dispute settlement body of the World Trade Organization (WTO) if the US denies it preferential benefits in retaliation for the barriers Washington claims its exports face.

As per US norms, a beneficiary country must meet 15 eligibility criteria established by the Congress, including combating child labour, respecting internationally recognised worker rights, providing adequate and effective intellectual property protection, and providing the US with equitable and reasonable market access in order to qualify for GSP.  “The US wants to use GSP as a ploy to get more market access in India. They will find some other way to curb the benefits,” said an expert on WTO issues.“If the US cites so-called market access barriers as the ground for denying us GSP benefits, then we can take them to dispute. This is so because GSP benefits are supposed to be non-reciprocal,” said Abhijit Das, professor and head, Centre for WTO Studies at the Indian Institute of Foreign Trade in Delhi. 

The US has said that for India, the GSP country eligibility review is based on concerns related to its compliance with the GSP market access criterion. 

However, India can challenge the US even if these conditions are not met and benefits are stopped.

In 2002, India had challenged the European Union’s GSP regime for seriously drug-affected countries, arguing that it discriminated among developing 
countries.

The WTO Appellate Body later found that the EU’s GSP drug regime then was not based on objective and transparent criteria for the selection of the 
beneficiary countries. “India should challenge the US because GSP has to be non-discriminatory. US-India bilateral merchandise trade was $64.5 billion in Financial Year 2017 with India’s exports adding up to $42.2 billion and imports at $22.7 billion. 

 

Chander Mohan

Krishi Jagran/New Delhi



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