New Delhi: India hasn’t received any communication from the World Trade Organization (WTO) or the US about a complaint lodged by the world’s biggest economy at WTO over the South Asian nation’s failure to notify around 50 subsidy programmes.

On 6 October, US trade representative Ron Kirk announced that the US has submitted information to WTO, identifying nearly 200 subsidy programmes of China and 50 Indian subsidy programmes that have not been notified as required under WTO rules.

Warning note: US trade representative Ron Kirk. Photo: Bloomberg

“The situation was simply intolerable. India only recently filed its first notification in almost 10 years, and even then notified only three of the many subsidy programmes we know to exist. Because China and India have failed to meet their respective obligations, we had to act—as we are entitled to under WTO rules—and provide the voluminous information we have developed regarding subsidy programmes in these two countries."

WTO members are obliged to notify their subsidies under article 25 of the agreement on subsidies and countervailing measures (SCM). However, under article 25.10 of the SCM agreement, if a member has not notified its subsidy programmes in a timely fashion, another member has to first raise the issue with the subsidizing member. If the programmes are not subsequently notified, the complaining member can bring the matter to the attention of WTO’s subsidies committee.

Kirk said that the US would have preferred to avoid the filings but it has done so to hold China and India accountable and to enforce the rules that all WTO members must follow. China and India are among the largest exporters in WTO, and it is simply unacceptable that they continue to evade their transparency commitments, Kirk said.

An Indian commerce ministry official, who declined to be identified, said India has not received any communication from the US or WTO so far.

“We don’t know what the US wants. If they want a dispute settlement mechanism to be set up, they have to first approach us for consultation. Mere averment on their part is not good enough," the official said.

Subsidies such as duty entitlement passbook scheme and the tax concessions provided to special economic zones and export oriented units, which potentially could be against WTO rules, have either been done away with or are on their way out, the official said, adding that other subsidies such as on food, fertilizer and fuel subsidies are perfectly legitimate as they do not impact global trade in any way.

Kirk said the notification obligation is particularly significant for members such as China, where inadequate transparency in so many areas places a tremendous burden on other WTO members seeking to better understand China’s trade policy measures. China has submitted only one subsidy notification since becoming a WTO member in December 2001. That notification took place more than five years ago and was noticeably incomplete, he said.

The Indian official cited above said the country is being unnecessarily dragged into what is basically a dispute between China and the US. “As US cannot be seen to be targeting only China, they are dragging us into it," he said.

However, Anwarul Hoda, professor at the Indian Council for Research on International Economic Relations and an expert on WTO matters, said one cannot take a country to a dispute settlement mechanism at WTO over not notifying the subsidies, and the move is only intended to exert diplomatic pressure.

“Many countries were not abiding by the requirement to notify subsidies. The US and the EU have also been guilty parties when it comes to agriculture subsidies," he said.

Hoda added that though this did not mean much, “we have to be more alert to be taken seriously at WTO".