India in the WTO

Continuing with my earlier posts about elections manifestos and trade policy issues in the 2009 Indian national elections, I looked at the NCP manifesto.

The 2009 NCP manifesto found here does not directly talk about trade policy or WTO issues. But there are some trade policy relevant promises.

The NCP will provide more subsidies for deep-sea fishing and exports. Wonder if they know about what has been going on in the Doha round fisheries subsidies negotiations?

Development of fisheries sector also will be intensified. Assistance will be given to the fishing community for deep sea fishing and processing and export.

The NCP is worried about job losses due to the current economic crisis and is especially worried about highly-skilled labor returning from home from foreign countries.

The global economic crisis that has caused collapse of the economy and retrenchment lakhs of employees working in financial and technical institutions and closing down hundreds of business firms in foreign countries. Though not in that magnitude it is having its effects on Indian economy as well.

Lakhs of Indians including skilled labours, who had been employed in various foreign countries, especially in the developed countries, who have lost their jobs are returning to India. Not only has this affected the contributions of the NRIs to our economy, but has created the problems of rehabilitating them.

The plight of Indian skilled workers returning home because of global meltdown deserve urgent attention. The skilled Indian workers in the past have remitted huge amounts of money, which has helped the country in swelling its forex reserves. Therefore, it is the duty of the government to help these personnel, small/medium scale enterprises by giving them liberal loans at a very concessional rate.

The mixed economy we pursue giving equal importance to public sector, private sector and joint sector has helped us to withstand the onslaught of the world economic recession. But it has slowed down our economic growth, increased our unemployment problems and other related matters. It has reduced export business and multiplied our problems in the sector.

Two packages have already been declared by the government and the banks and government has adopted some measures to ease the situation. But still the situation has not been brought under control.

The onslaught of the global economic recession has started affecting our economy also. Large-scale retrenchments, lay offs, causalisation of employees are creating serious employment problems.

Our economic reforms should necessarily be implemented with a human face. It shall not affect the employment sector negatively.

The NCP wants a boost for domestic consumption:

Under the circumstances, our industries have to concentrate on goods for domestic consumption. Domestic consumption should be encouraged for which the purchasing capacity of the people should be improved. Cheaper goods to meet market competition should be targeted. The growth in the agriculture sector will certainly contribute to the purchasing power of the people to some extent. More investment on infrastructure development, widening the scope of employment guarantee scheme and on other rural development activities would improve the purchasing capacity of the people.

The NCP spells out its concept of development:

By development, we mean overall development of the life of the common man including the weaker sections of the society in as much as it provides a better life for them, better housing facilities, better food, better clothing, facilities for giving better education for their children, and better health facilities. All these depend on more earnings or remuneration. So the economic development should provide for more employment opportunities and more employment generation schemes and projects.

Well, the manifesto seems to have been very hurriedly put together. I guess they don’t rely much upon their manifesto to get votes.

Reuters reports:

A WTO dispute settlement panel said a requirement by the United States on India and Thailand to post bonds to cover full anti-dumping duties on imports of shrimp violated trade rules.

The panel, confirming preliminary rulings from October, also backed a Thai complaint against a controversial U.S. method of calculating anti-dumping duties, known as zeroing, which has come increasingly under attack at the WTO.

The panel found the application of the bond to cover the full duties was inconsistent with anti-dumping rules, as was the U.S. use of zeroing to calculate anti-dumping margins.

…

What the dispute was about: 

U.S. Customs introduced a requirement in 2004 that exporters subject to paying anti-dumping duties had to post a bond covering the full amount if there was a risk of default.

Previously affected countries had to post a bond equivalent to only 10 percent of the duties.

India and Thailand argued the requirement to post the full amount was an excessive financial burden on exporters paying the anti-dumping duties.

WTO rules allow a country to levy duties on goods that are “dumped”, or imported at a price below what they are sold for in the exporting country, if that hurts competitors in the importing country.

But there is much controversy about how such anti-dumping duties are calculated and implemented.

The full bond requirement was illegal because WTO rules do not allow an importer to counter dumping with specific measures besides anti-dumping duties.

The U.S. response:

Washington called the findings of the panel “mixed.”

“The panel rejected many of Thailand and India’s claims that an additional bonding requirement is “as such” inconsistent with U.S. obligations under the WTO Anti-dumping Agreement,” said Gretchen Hamel, a spokeswoman for Trade Representative Susan Schwab.

The background:

The case affects Thai seafood exporters such as Thai Union Frozen Products (TUF), Charoen Pokphand Foods and Seafresh Industry.

It will also interest a range of Indian companies including Avanti Feeds, Uniroyal Marine Exports, Waterbase and unlisted exporters Devi Seafoods and Falcon Marine Exports. Thailand is by far the biggest supplier of shrimp to the United States.

According to the U.S. National Marine Fisheries Service, the United States imported $3.9 billion of shrimp in 2007, down from $4.1 billion in 2006.

In the biggest single category, peeled frozen shrimp, accounting for one third of the total, Thailand was the biggest supplier, with nearly one third of that type, followed by Vietnam, Indonesia and India.

Thai exported shrimp end up on the shelves of U.S. retailers such as Wal-Mart Stores.

Total Thai shrimp exports rose about 10 percent in volume terms to 360,000 tonnes in 2007, but in cash terms fell to about 78 billion baht ($1.99 billion) from 84 billion in 2006 because of the strong baht and falling shrimp prices. The Thai shrimp association expects about 60 percent of this year’s exports to go to the United States.

Last year another ruling from the WTO forced the United States to lift anti-dumping duties on shrimp from Ecuador.

One immediate point of interest would be an analysis of the difference in the strategies of Thailand and India in this dispute. India’s legal claims went beyond what Thailand argued. More on this and oher aspects of the panel rulings later.

Kamat, Manasvi Manoj and Kamat, Manoj Subhash, “Implications of the WTO-GATS on Indian Marine Industry, Issues and Policy Perspectives” . Available at SSRN: http://ssrn.com/abstract=1069521

SSRN Abstract:
The outcomes of WTO negotiations under the Doha round, Hong Kong development round and the changing European Union regulations are likely to place new hurdles on the marine exports emerging from developing economies like India. In the light of the above, we attempt to discuss the impact of WTO-GATS on the Indian Marine Trade and Service industry, analyze the challenges faced by the developing countries, and suggest way-outs to respond them. Many other WTO-GATS related aspects have repercussions on the marine exports from the developing countries in Asia and India in particular; namely the outcomes from the Dispute Settlement Mechanism (DSM), the relation between trade rules and Multilateral Environmental Agreements (MEAs), Technical Assistance and Capacity Building (TA & CB) and the provisions for Special and Differential Treatment (SDT). The impact of GATS and the implications on Indian marine trade & services are specifically assessed in context of Tariff barriers, Non-tariff measures, Subsidies and Eco-labeling. Relevant policy implications follow the issues discussed.