U.S. files WTO case over India export subsidies

The Office of the U.S. Trade Representative has requested consultations over several export promotion programs that the U.S. says violate World Trade Organization rules, including programs to support steel and special economic zones.

   The U.S. has requested World Trade Organization (WTO) consultations with India over the country’s export subsidies, the Office of the U.S. Trade Representative (USTR) announced Wednesday.
   The subsidy programs at issue are merchandise exports, electronics hardware technology parks, special economic zones, capital goods, and a duty-free imports for exporters program, USTR said.
   “These export subsidy programs harm American workers by creating an uneven playing field on which they must compete,” U.S. Trade Representative Robert Lighthizer said in a statement. “USTR will continue to hold our trading partners accountable by vigorously enforcing U.S. rights under our trade agreements and by promoting fair and reciprocal trade through all available tools, including the WTO.”
   USTR said India, through the programs, provides exemptions from certain duties, taxes, and fees; reduces import duty liability, and “benefits numerous Indian producers,” including producers of steel, pharmaceuticals, chemicals, information technology products, textiles and apparel.
   “Thousands” of Indian companies are receiving benefits totaling more than $7 billion a year from the programs, the agency said.
   USTR’s move follows statements by Indian government officials that the country could take action at the WTO against U.S. tariffs on steel and aluminum.
   India threatened a trade dispute after President Donald Trump on Friday proclaimed generally global tariffs of 25 percent on steel and 10 percent on aluminum to take effect on March 23, following a determination of the risk that such imports could harm U.S. national security.
   The China Trade Task Force (CTTF) on Wednesday challenged the basis for India’s threats in a Wednesday statement, saying the country has increased its tariffs on aluminum imports from 7.5 percent to 10 percent in recent years.
   “Though quick to decry a 10 percent tariff on U.S. imports of aluminum from India and elsewhere, India imposes its own tariffs on aluminum,” Alan Price, an attorney for CTTF and head of Wiley Rein’s International Trade Practice, said in a statement. “This is precisely what President Trump means when he says that tariff treatment must be reciprocal. While India touts free trade, it merely pays lip service to this principle. India provides significant subsidies to its state-owned aluminum producers and has little interest in fair and reciprocal trade.”
   Also, Indian primary aluminum production has risen by almost 100 percent since 2013, a faster growth rate than China, and a rate that far exceeds India’s consumption rate, resulting in a huge increase in Indian exports of aluminum to the U.S., CTTF said.
   As for USTR’s WTO case against India, the agency said total exports from Indian special economic zones grew over 6,000 percent from 2000 to 2017, and exports under Indian sector-specific schemes, including the electronics hardware technology parks scheme, increased by more than 160 percent from 2000 to 2016.
   The consultation request drew praise from House Ways and Means Committee Chairman Kevin Brady, R-Texas, who called it a “plain and unmistakable signal” that the U.S. won’t tolerate any unfair practices by its trading partners.
   “In responding to India’s prohibited subsidization of its steel industry in this manner, we prove the significance of the WTO dispute settlement process as a powerful, valuable, and appropriate tool in the Administration’s toolbox to address unfair practices that hurt our steel workers and companies,” Brady said.
   The U.S. and India have 60 days to try to resolve USTR’s case through consultations. If consultations fail to resolve the matter, the U.S. can then request formation of a WTO dispute panel for adjudication.