The experts believe the countries will now need to form a proper and strong mechanism to resolve trade related issues bilaterally so that they do not have to file complaints in the WTO.
International trade expert Biswajit Dhar expressed his positive outlook on this announcement, highlighting its potential to promote bilateral trade between India and the US.
“We now have to see what trade-offs happen between the countries to finally end these trade disputes. The announcement overall looks positive. A strong mechanism needs to be put in place so that such disputes do not occur and be resolved bilaterally through mutually agreed solutions,” Dhar told PTI.
India and the US have agreed to end six trade disputes at the World Trade Organisation while New Delhi will also remove retaliatory customs duties on 28 American products such as almonds, walnuts, and apples.
The bilateral trade relationship between India and the US has been flourishing, with the US emerging as India’s largest trading partner in the past fiscal year that ended March 31. Provisional data from the commerce ministry reveals a 7.65% increase in bilateral trade to $128.55 billion in 2022-23, compared with $119.5 billion in the previous year. India’s exports to the US rose by 2.81% to $78.31 billion, while imports grew by approximately 16% to $50.24 billion in fiscal 2023.Earlier this month, US Ambassador to India Eric Garcetti had said the US-India trade relationship is crucial and bilateral trade plays a key role in addressing shared challenges in the global economy.
The decision to end the trade disputes is expected to have a positive impact on India’s exports to the US, according to Ajay Sahai, Director General of the Federation of Indian Export Organisations (FIEO).
“It is positive development. We were eagerly waiting for this decision. This will give a fillip to India’s exports to the US,” Sahai told PTI.
Furthermore, experts believe that this resolution will help strengthen the 2+2 dialogue between India and the US and facilitate further promotion of trade. Rakesh Mohan Joshi, Director of the Indian Institute of Plantation Management Bengaluru (IIPMB), supported this notion, emphasising the favorable implications of such decisions on trade relations.
The six trade disputes that have been resolved include countervailing measures on certain hot-rolled carbon steel flat products, measures related to solar cells and modules, measures concerning the renewable energy sector, export-related measures, certain measures on steel and aluminum products, and additional duties on specific US products.
Trade experts suggest that both countries can settle these disputes on mutually agreed terms and subsequently inform the WTO in Geneva about the resolution. This approach aims to address concerns collaboratively and avoid escalating disputes unnecessarily.
In the past, trade tensions arose when the US imposed import duties on certain steel and aluminum products, citing national security concerns. In response, India implemented customs duties on various American goods in 2019, including chickpeas, lentils, almonds, walnuts, apples, boric acid, and diagnostic reagents. India also filed a complaint against the US at the WTO regarding these imposed duties.
Throughout the years, consultations between India and the US were sought regarding various trade measures, including countervailing duties, domestic content requirements for solar cells and modules, domestic content requirements and subsidies in the energy sector, alleged export subsidy measures, and measures adjusting steel and aluminum imports. These consultations aimed to address trade concerns and bring them in line with WTO rules.
According to WTO rules, member countries can file a case with the WTO if they believe a specific trade measure violates the organization’s norms. Bilateral consultations serve as the initial step in resolving disputes. If both parties cannot reach a resolution through consultation, either side can escalate the matter to a dispute settlement panel.
However, it is worth noting that the WTO’s appellate body, responsible for reviewing panel rulings and reports, is currently non-functioning due to disagreements among member countries regarding the appointment of its members. Consequently, several disputes await resolution once the appellate body is reinstated. The US has been blocking the appointment of new members, contributing to the current impasse.
These recent developments signify a positive step forward for the trade relationship between India and the US, fostering the hope of a more cooperative and mutually beneficial trade environment.
(with inputs from PTI)