U.S. Requests Review of India’s Export Subsidies

U.S. asked WTO to evaluate whether India is entitled to provide textiles and apparel export subsidies that are normally prohibited under global rules.

GENEVA — The U.S. has asked the World Trade Organization to evaluate whether India is still entitled to provide export subsidies to its textiles and apparel sector that are normally prohibited under global rules.

This story first appeared in the March 5, 2010 issue of WWD.  Subscribe Today.

Under WTO subsidy rules, countries designated as least developed nations, and also some developing nations, including India, are allowed to use such subsidies providing they meet certain conditions. However, the conditions also stipulate that developing nations such as India can no longer benefit from the exemption from the subsidy prohibition if it has reached export competitiveness in a product. This would occur if exports of the product have reached 3.25 percent share of world trade of that product for two consecutive years.

A ruling supporting the U.S. request would require India to gradually phase out such export subsidies over a period of eight years. The U.S. request concerns virtually all textile and apparel product categories and wants the review to go back to 1996.

In its submission, the U.S. argues it has “reason to believe that India has met the definition of export competitiveness…for certain products.”

A spokeswoman for the U.S. Trade Representative said the last computation for India was made in 2003 for certain textile and apparel products. She said based on information in the public domain, the U.S. “is aware of certain programs in India that appear to be export subsidies. The U.S. Department of Commerce has also conducted several countervailing duty investigations in which it has examined programs that appear to be contingent upon exportation.”

A senior Indian trade official, speaking on condition of anonymity, said the U.S. is entitled to ask for such a study, but added that he believes India is still “entitled” to benefits allowed under WTO rules.

According to WTO statistics, in 2008 India’s exports of textiles totaled $10.27 billion, representing a 4.1 percent global share, and its exports of apparel were valued at $10.9 billion for a 3 percent global share.