India looks to counter US move on trade sanctions

Background: India-US relations, Trade disputes, World Trade Organisation (WTO), Trade-Related Investment Measures, Sequencing agreement.

  • The Centre is weighing all options including retaliatory measures to counter a US move to seek imposition of more than $450 million in trade sanctions against India on the grounds that New Delhi failed to comply with the WTO order in the poultry import ban case.
  • The WTO Appellate Body had found that India’s import prohibition on poultry and poultry products was discriminatory and more trade-restrictive than required, and therefore violated WTO norms. As per the US, India failed to comply with the WTO body’s recommendations within the set deadline (of June 19) – a claim which New Delhi is contesting on technical grounds.
  • The US now wants an arbitration panel under the WTO to approve imposing trade sanctions that could cost India more than $450 million annually.
  • According to the WTO, the US had filed the case against India’s prohibition on importation of various agricultural products (including poultry) from the US purportedly because of concerns related to Avian Influenza (bird flu). The US had claimed that the ban was against WTO norms and had hurt its poultry exports to India.
  • Official sources said that the options now being considered by India include: (i) raising its concerns – over the surprisingly aggressive US push for such trade sanctions – at high-level bilateral meetings in August (the Strategic & Commercial Dialogue) and October (Trade Policy Forum) and (ii) ensuring through discussions that the US agrees to withdraw its efforts to seek an arbitration panel for assessing the quantum of trade sanctions, and instead give consent to India’s demand for a sequencing agreement.
  • The sequencing agreement is to ensure that the matter is instead referred to a WTO compliance panel, which will look into India’s claim that it has complied with the WTO appellate panel’s recommendations.
  • The sources said the retaliatory measures that India is planning include expediting internal preparations to file as many as 14 cases at the WTO against the US alleging that renewable energy policies of many State governments in the US have very significant domestic content requirements violating America’s obligations under the WTO agreements on Trade-Related Investment Measures as well as on Subsidies & Countervailing Measures.
  • India had sought a sequencing agreement with the US before the June 19 deadline itself in the poultry case. However, Washington rejected it saying it could not enter into such negotiations especially when India had not even put out its official notification at that time in compliance with the WTO ruling.

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