The Trump administration has fixed offensive steps against India. He did this by dragging it to the World Trade Organisation (WTO). It is for providing export subsidies through 6 schemes. This also includes SEZs and the Merchandise Exports from India Scheme.
The US has argued that the incentives break WTO agreements. As India is no longer below the economic benchmark of $1,000 per capita gross national income (GNI).
“These export subsidy programmes harm American workers by creating an uneven playing field on which they must compete.
US trade representative Robert Lighthizer said, “USTR will continue to hold our trading partners liable by robustly applying US rights under our trade agreements. Also, by promoting fair and reciprocal trade through all available tools, including the WTO,”.
Furthermore, US has also estimated the quantum of incentives offered by India at $7 billion.
Indian officials blamed the Trump administration
On this matter, Rita Teaotia said India also has a similar period of eight years to graduate out of the subsidy regime. This is what we will before the US.
We are hopeful that they will recognize this time frame and during this time frame we will commit ourselves and meet our obligations”. Also, India is not offering subsidies but many of the “incentives” were actually meant to counterbalance the impact of taxes.
Besides, some other countries such as Egypt and Sri Lanka have been allowed the transition period so Indian should also get. Also, Indian officials said and blamed the Trump administration. It is for targeting India as part of a strategy focused on pleasing its domestic constituency.
Moreover, the country has also filed a complaint against American decision. It is for imposing high fees on temporary working visas.
An exception to the WTO treaties
US authorities have launched a strategy to address domestic concerns over job losses. Due to off-shoring of services and imports from countries such as China and India.
In recent months, visa rules for technology professionals have been tightened. Also, the import duties on several products have been raised. For instance steel and aluminum.
Indian officials pointed to the exception in the WTO treaties. They said a country which had $950 per capita GNI may not be allowed a transition period. Whereas a country above the threshold got eight years to wind up incentives.
Teaotia said that India had highlighted the issue in 2011 itself. But the WTO had pointed out that India broke the benchmark in 2015. So, eight-year transition period should be calculated from 2017, when the multilateral trade body pointed it out.
The US blames India for not just continuing with the incentives, which were allowed till the limit was exceeded in 2015. Along with that government also extended the scope of the programme.
- The US argues that the subsidies violate WTO agreements
- As India is no longer below the economic benchmark of $1,000 per capita gross national income
- India claims that like with other countries previously, it should also be allowed a transition period of eight years.