WTO Setup Panel on Alleged Export Subsidies by India

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Recently, the WTO’s Dispute Settlement Body (DSB) agreed to a request from the United States for the establishment of a dispute panel to examine certain alleged export subsidy measures in India.

The DSB also agreed to a request from Korea for a dispute panel to examine US anti-dumping and countervailing duties on certain products from Korea and the US use of “facts available”.

The United States said all WTO members, including India, are required to provide subsidies consistent with provisions of the WTO’s Agreement on Subsidies and Countervailing Measures (ASCM), including refraining from providing subsidies contingent upon export performance.

Regrettably, the US said, India appears to be providing such subsidies through various export promotion programmes, special economic zones and duty-free imports for the exporters programme. The US said it sought to resolve its concerns with India through prior consultations but that India was continuing to grant these export-contingent subsidies and even expanded the scope and scale of its export subsidies. In line with Article 4.4 of the ASCM, the US asked the DSB to establish a panel upon first request.

India said it was disappointed that the United States had chosen to move forward with a request for a panel, as it believed bilateral consultations held on 11 April were constructive. During the consultations, India provided a detailed understanding of the schemes implemented under India’s Foreign Trade Policy by answering all the questions raised by the US.

India said the schemes identified by the US do not violate India’s WTO obligations and are in conformity with all the elements of the ASCM. India also said it had concerns with the broad and imprecise nature of the initial US request for consultations which is not in conformity with the requirements under the ASCM and the Dispute Settlement Understanding.

The DSB agreed to the establishment of the panel. The European Union, Canada, China, Egypt, Japan, Kazakhstan, Korea, the Russian Federation and Sri Lanka reserved their third-party rights to participate in the panel proceedings.

Resolution of Trade Disputes in WTO:

Resolving trade disputes is one of the core activities of the WTO. A dispute arises when a member government believes another member government is violating an agreement or a commitment that it has made in the WTO. The WTO has one of the most active international dispute settlement mechanisms in the world. Since 1995, over 500 disputes have been brought to the WTO and over 350 rulings have been issued.

The General Council convenes as the Dispute Settlement Body (DSB) to deal with disputes between WTO members. Such disputes may arise with respect to any agreement contained in the Final Act of the Uruguay Round that is subject to the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU).

The DSB has authority to establish dispute settlement panels, refer matters to arbitration, adopt panel, Appellate Body and arbitration reports, maintain surveillance over the implementation of recommendations and rulings contained in such reports, and authorize suspension of concessions in the event of non-compliance with those recommendations and rulings.

How long to settle a dispute in WTO?

These approximate periods for each stage of a dispute settlement procedure are target figures — the agreement is flexible. In addition, the countries can settle their dispute themselves at any stage. Totals are also approximate.

60 days: Consultations, mediation, etc

45 days: Panel set up and panellists appointed

6 months: Final panel report to parties

3 weeks: Final panel report to WTO members

60 days: Dispute Settlement Body adopts report (if no appeal)

Total = 1 year (without appeal)

60-90 days: Appeals report

30 days: Dispute Settlement Body adopts appeals report

Total = 1y 3m (with appeal)

Panels are like tribunals. But unlike in a normal tribunal, the panellists are usually chosen in consultation with the countries in dispute. Only if the two sides cannot agree does the WTO director-general appoint them.

Panels consist of three (possibly five) experts from different countries who examine the evidence and decide who is right and who is wrong. The panel’s report is passed to the Dispute Settlement Body, which can only reject the report by consensus.

Panelists for each case may be chosen from an indicative list of well-qualified candidates nominated by WTO Members, although others may be considered as well, including those who have formerly served as panelist.

Panelists serve in their individual capacities. They cannot receive instructions from any government. The indicative list is maintained by the Secretariat and periodically revised according to any modifications or additions submitted by Members.

Either side can appeal a panel’s ruling. Sometimes both sides do so. Appeals have to be based on points of law such as legal interpretation — they cannot reexamine existing evidence or examine new issues.

Each appeal is heard by three members of a permanent seven-member Appellate Body set up by the Dispute Settlement Body and broadly representing the range of WTO membership. Members of the Appellate Body have four-year terms. They have to be individuals with recognized standing in the field of law and international trade, not affiliated with any government.

The appeal can uphold, modify or reverse the panel’s legal findings and conclusions. Normally appeals should not last more than 60 days, with an absolute maximum of 90 days.

The Dispute Settlement Body has to accept or reject the appeals report within 30 days — and rejection is only possible by consensus.

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