Indian Export Schemes Under WTO Scrutiny As US Succeeds In Setting Up Dispute Panel

A Dispute Settlement Panel has been set up by the World Trade Organsiation (WTO) to adjudicate on a complaint by the US against some of India’s export schemes. The United States has contended that these schemes provide subsidies that aren’t allowed under WTO regulations, financial daily Business Line reported.

A WTO statement said that the disputes panel would be set up under special provisions of the organisation’s agreement on subsidies and countervailing measures. The agreement permits the setting up of a panel to adjudicate on a first request by a complainant. Usually, the country against which charges are made can object when the first request is made. But under the subsidies agreement, such objections are not permitted.

The US has objected to incentives given to Indian exporters under the Export-Oriented Units scheme, which promotes setting up of export industries.The Electronics Hardware Technology Park Scheme, the good old scheme under which special economic zones were set up, the Export Promotion Capital Goods Scheme that allows imports of capital goods at zero duty and the duty-free imports against exports scheme have all been targeted by the Washington in its complaint.

The US has contended that these schemes extend financial benefits to Indian exporters, who in turn took advantage and sold their goods cheaply. Such exports affected American workers and manufacturing units, it complained.

India had been exempt from offering subsidies earlier as its GDP was below $1,000. Now that the level has been breached, the US contends that it no longer can afford such sops. Indian official say that the country should be given time to phase-out the subsidies that could be done only after a thorough discussions with WTO members.

In 1998, the European Union complained against India’s export scheme but both the parties settled the issue through discussions with India convincing the EU of its export schemes. The US, Canada, Australia, Japan and Switzerland were third parties to the dispute which could have benefitted them in case the dispute panel had found fault with India.

The panel has been set up after India and the US failed to reach any understandings at the discussions held on 11 April this year.