In U.S. trade action, an Indian
counter-strategy (The Hindu)
Mains Paper 2: International Relations
Prelims level: Agreement on Subsidies and Countervailing Measures
Mains level: Important of the special and differential treatment for India
- The US has officially dropped India from the list of developing
- So, in its future countervailing duty investigations, the U.S. would
treat India as a developed country.
What does the ASCM say?
- The US designated the developing and least-developed countries for the
purposes of implementing the countervailing measures.
- These measures are provided by the Agreement on Subsidies and
Countervailing Measures (ASCM) of World Trade Organisation (WTO).
- Developing countries can be granted higher subsidies as compared to the
developed countries before countervailing duties can be imposed.
How the “developing” tag is designated?
- Under the WTO rules, any country can “self-designate” itself as a
- But, US employed an arbitrary methodology that took into consideration
many factors to exclude India from the developing countries list.
- Over the past years, the US has been arguing that the emerging economies
like China and India have performed much better that those in the developed
- Therefore, it said that they should no longer enjoy the slew of benefits
that they have as developing country members of the organisation.
What are the initiatives in which US refuse India?
- It excluded India from the lists of developing countries for the
purposes of using countervailing measures.
- It also denied the benefits of GSP (Generalized System of Preferences).
- These are the more recent initiatives that the U.S. has taken to
challenge India’s status as a developing country in the WTO.
- A special window provided by the U.S. and several other developed
countries, through which they import identified products from developing
countries at concessional rates of duties.
What could be the impacts of these initiatives?
- India would lose the ability to use the Special and differential
treatment to which every developing WTO member has a right.
- Lessens the burden of adjustment that developing countries have to make
while acceding to the various agreements under the WTO.]
Important is Special and differential treatment for India:
- Special and differential treatment has been particularly beneficial for
India in two critical areas:
- Implementation of the disciplines on agricultural subsidies,
- Opening up the markets for both agricultural and non-agricultural
- When the WTO finalises an agreement in a specific area, developing
countries are allowed longer implementation periods.
- This measure helps developing countries to introduce a new agreement in
phases and thus deploy resources beyond their capacities.
- The WTO Agreement on Agriculture (AoA) provides an elaborate discipline
- Out of the three subsidies, two are virtually outside the discipline
since the WTO does not limit spending on these categories of subsidies.
What is the discipline that exists in the subsidies?
- The discipline exists in case of price support measures (minimum support
price) and input subsidies.
- This is the more common form of subsidies for most developing countries,
including in India.
- For developing countries, spending on price support measures and input
subsides taken together can’t exceed 10% of the total value of agricultural
- In contrast, developed countries are allowed to spend only 5% of their
value of agricultural production.
Why shifting to DBT is considered?
- India is a major user of price support measures and input subsidies.
- So, given the constraints in AoA, the government is intending to move
into the system of direct benefit transfer (DBT) for supporting farmers.
- This shift is attractive for India since there are no limits on
spending, unlike in case of price support measures and input subsidies.
- This implies that in the foreseeable future, India would continue to
depend on price support measures and input subsidies.
- Given this scenario, the government needs the policy space to provide
adequate levels of subsidies to a crisis-ridden agricultural sector.
- Therefore, it is imperative that it continues to enjoy the benefits as a
developing country member of the WTO.
Issues of tariffs:
- The issue of market access, or the use of import tariffs, is one of the
important trade policy instruments.
- It has some key provisions on Special and differential treatment which
the developing countries can benefit from.
- The most important among these is the undertaking from the developed
countries that they would not demand reciprocal tariff cuts.
- Recently, the government of India has been extensively using import
tariffs for protecting Indian businesses from import competition.
- The 2020-21 Budget has enhanced the level of protection of the domestic
players in key sectors, thus pushing the average tariffs even higher.
- Developed country members of the WTO have generally maintained very low
levels of tariffs.
- Therefore, India maintaining a reasonable level of tariff protection
would be well served through its continued access to S&DT, by remaining as a
developing country member of the WTO.
Q.1) Consider the following statements:
1. February 11 was the International Day of Women and Girls in Science,
established by the United Nations to promote equal access to and participation
in science for women and girls.
2. According to a 2018 fact sheet prepared by UNESCO on women in science, just
28.8% of researchers are women.
Which of the statements given above are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) None of the above
Q.1) Indian interests would be well-served by maintaining a reasonable
level of tariff protection. Elucidate the statement.
Q.2) Describe the importance of Special and differential treatment in India.