India-US tussle over agricultural trade restrictions turns bitter at WTO

India and the US continue to lock horns at the World Trade Organisation (WTO) on a major dispute concerning certain American agricultural products with both sides differing on whether India has complied with a WTO ruling and the procedures through which to solve the dispute.

The US said in a 5 September regular meeting of the Dispute Settlement Body (DSB) that India has retained “many” aspects of the measure at issue of a dispute despite claims by the country of already having complied with a WTO ruling.

The US said that the revised measure undertaken by India “appears to” impose the same import prohibitions on account of avian influenza outbreaks as the original measure. “Given that the revised measure, like the original measure, does not appear to be based on risk assessment, India would appear to have no basis for imposing its import restrictions on US agricultural products,” the US stated. Moreover, the revised measure “appears to be more trade restrictive” than measures based on international guidelines.

India’s revised measure does not address DSB’s findings and recommendations and “unjustifiably discriminates” against American imports, a US official argued.

 India-US tussle over agricultural trade restrictions turns bitter at WTO

World Trade Organisation director-general Brazil's Roberto Azevedo. AFP

India responded by stating that it had already fully complied with the rulings and recommendations in this dispute — the US claim, therefore, had no legal basis. The DSB cannot allow a US request for $450 million per annum retaliation if there is full compliance of the ruling by India.

WTO referred a case by the US against India at a special meeting on 19 July on import of certain US agricultural produce, for arbitration — known as “suspension of concession” in WTO-speak. The US has slammed a retaliation of $450 million annually on India for harming US trade interests by India’s failure to comply with a WTO ruling within a given time frame.

This case was initiated by the US against India in March 2012 after India had restricted various American agricultural products, including poultry meat, eggs, and live pigs, to prevent entry of avian influenza into India, for a period of about seven years. The US argued that such an Indian policy was discriminatory and violated WTO’s Sanitary and Phytosanitary (SPS) agreement.

After consultations between the disputing parties failed, the matter was brought to the DSB which ruled against India in October 2014. India appealed against the ruling in January 2015 but lost, again, in the appellate ruling. The US said that India had not adopted “any changes to the measure at issue in the dispute” by 19 July — the reasonable period given by WTO for compliance — after which the US had pushed the matter for arbitration.

The US in its 5 September DSB meeting also complained that India adopted revisions only in late July and informed this measure to the SPS committee and not the DSB.

India, on its part, has strongly objected to the $450 million per annum retaliation figure.

The DSB, India added yesterday, cannot allow a request for retaliation if there is full compliance and the “proper approach” in this case is a sequencing agreement. India emphasized its previous call for an investigation into its compliance first instead of immediately conducting arbitration on the US request for retaliation.

The US replied that there is nothing provided in WTO rules requiring such a sequence of procedures.

“The US remains open to working with India on a mutually agreed resolution to this dispute,” it added.

The "arbitrator" comprises the original three-member panel who are required to issue their ruling within 60 days of the end of the “reasonable period”— in this case, it was the 18 August.

Brazil stated that WTO members must pay attention to this case as attempts to clarify sequencing rules in previous years have not yet been resolved.

The EU said that it that will be following developments of this case closely.

The US is one of the largest exporters of chicken meat — the American poultry industry directly employs over 3,50,000 workers and consists of nearly 50,000 family farms.

According to the office of the USTR, “US exports to India of just poultry meat alone could easily exceed $300 million a year once India’s restrictions are removed – and are likely to grow substantially in the future as India’s demand for high quality protein increases.”

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Updated Date: Sep 06, 2016 16:11:45 IST