New Delhi: India strongly refuted charges by the US that it had created trade barriers against exports, accusing the US of adopting protectionist trade policies.
The US, in a March report by the US Trade Representative office titled 2013 National Trade Estimate Report on Foreign Trade Barriers, blamed India among other countries for creating significant tariff and non-tariff barriers that impeded exports of US products.
In reply, India’s commerce ministry said the country’s policies relating to tariffs, import policies, government procurement, export subsidies and intellectual property protection are consistent with its international and bilateral obligations.
The US in its report also alleged there was a large disparity between bound and applied rates of tariffs in India and thus “US exporters face tremendous uncertainty because India has considerable flexibility to change tariff rates at any time”.
The Indian commerce ministry said this was erroneously construed as a barrier by the US. “This position reflects a lack of understanding of the international commitments and the policy space countries have to implement tariff policies,” India said.
While bound rates under the World Trade Organization (WTO) define limits above which countries cannot raise their tariffs, India has unilaterally reduced its applied tariff rates in many sectors well below WTO commitments.
Trade relations between the two countries have recently soured with both dragging the other to the WTO alleging violation of commitments. In March, the US took India to the WTO challenging the domestic sourcing requirement in its National Solar Mission.
The commerce ministry in its note said the local sourcing requirement was consistent with India’s obligations under various international pacts. “On the other hand, India notes with serious concern the Buy American provisions as well as many programs in the US relating to the promotion of renewable energy contingent on local content requirements,” it said.
Anwarul Hoda, professor at the Indian Council for Research on International Economic Relations, said both countries should solve their differences on trade issues through bilateral consultation. “This type of accusations and counter-accusations is neither good for the two countries not for world trade,” he said.
The US Trade Representative report has drawn other replies and counter-charges from India.
To the US charge that India’s government procurement policy is not transparent, the ministry said India exercised the policy in consonance with its perception of national interest and policy prerogatives. “They neither violate any international agreement nor bilateral commitment,” it said.
The US also demanded that as a signatory of the Agreement on Subsidies and Countervailing Measures (ASCM), India should phase out export subsidies such as those to the textile sector. “Indian textiles sector remains a beneficiary of many export promotion measures (e.g., Export-Oriented Units, Special Economic Zones, Export Promotion Capital Goods, Focus Product and Focus Market Schemes) that provide, among other things, exemptions from customs duties and internal taxes based on export performance,” it said.
India’s commerce ministry replied the country will phase out export subsidies as per its commitments under ASCM. But it also said “the ASCM further reiterates that members recognize that subsidies play an important role in economic development programs of developing countries.”
The US in May 2012 put India on a priority watchlist because of concerns regarding weak protection and enforcement of intellectual property rights, which India strongly objected to. Trade minister Anand Sharma wrote to US counterpart Ron Kirk terming the move “unilateral, unfortunate and unjustified”.
In an earlier report in December 2011, the US identified Nehru Place in New Delhi as among the 30 most notorious information technology (IT) markets in the world dealing in goods and services that infringed intellectual property rights.
The commerce ministry has said that India’s intellectual property regime and decisions based on the national legal framework were in consonance with its obligations under the Trade-related Aspects of Intellectual Property Rights (TRIPS) agreement.
The latest US report also refers to alleged barriers in major services industries such as insurance, banking, audiovisual services, accounting, legal services, telecommunications, distribution services, postal and express delivery services.
The commerce ministry said the regulatory regime in these sectors is based on India’s national interest and in accordance with India’s commitments under the General Agreement on Trade in Services (GATS).
“On the contrary, India views with serious concern the steep hike in visa fees under the Public Law of the US which has implications for US obligations under the WTO. India believes that further liberalization of the services sector would be possible on a multilateral basis rather than on plurilateral efforts,” it said.