Aspirant Academy

Economy

WTO Dispute Settlement and India

Global Economic Issues: WTO, World Bank, IMF Roles

Paper I · Unit 2 Section 4 of 11 0 PYQs 36 min
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WTO Dispute Settlement and India

3.1 Dispute Settlement Mechanism (DSM)

The Dispute Settlement Body (DSB) of the WTO manages trade disputes:

Process:

  1. Consultations (60 days): Disputing parties must first consult bilaterally
  2. Panel (6 months + 3 months): If consultations fail, a 3-member panel is constituted; issues Panel Report
  3. Appellate Body (3 months): Either party can appeal to the 7-member Appellate Body; AB Report is binding
  4. Implementation: Losing party must comply within "reasonable period of time" (usually 15 months)
  5. Retaliation: If non-compliance, winning party can impose trade countermeasures (retaliation) proportional to WTO-authorized value

Appellate Body Crisis:

  • US has blocked all new AB appointments since December 2019, alleging AB "overreaches" by making binding decisions on issues not raised by parties, and taking longer than the 90-day mandate
  • By December 2019: AB had only 1 member left (minimum 3 needed) — AB became non-functional
  • Multi-Party Interim Appeal Arbitration Arrangement (MPIA): 53 WTO members (including EU, India, China, Brazil) agreed to use an alternative appeals mechanism under Art. 25 arbitration while AB is non-functional. The US is not part of MPIA.
  • This is the most serious institutional crisis WTO has faced.

3.2 India's Key WTO Disputes

India as Respondent (India challenged by others):

  • India — Solar Cells (DS456): US challenged India's Domestic Content Requirement (DCR) in the Jawaharlal Nehru National Solar Mission requiring domestic solar cells — WTO AB ruled against India (2016); India lost
  • India — Agricultural Export Subsidies: US challenged India's various export incentive schemes (MEIS, EOU, SEZ) — multiple ongoing disputes
  • India — Steel Safeguard: EU and Japan challenged India's safeguard measures on steel imports — ongoing

India as Complainant (India challenging others):

  • India — US Section 232 Steel/Aluminium: India challenged US tariffs on steel (25%) and aluminium (10%) under Trump-era national security invocations — India sought $1.91 billion retaliation authority
  • India — EU Carbon Border Adjustment Mechanism (CBAM): India has raised WTO compatibility concerns regarding EU's CBAM (carbon tax on imports)

3.3 India's Strategic WTO Positions

Agriculture: India consistently defends public stockholding for food security — argues MSP and PDS operations should be exempt from WTO subsidy disciplines. "Peace Clause" is a temporary shield; India wants permanent exemption.

TRIPS and Access to Medicines: India successfully defended Section 3(d) of Patents Act (prevents "evergreening" of pharmaceutical patents) — allows compulsory licensing for public health emergencies. India was lead advocate at WTO for TRIPS waiver during COVID-19 (partial waiver agreed MC12, June 2022).

Services (GATS Mode 4): India's largest strategic interest — movement of natural persons (Mode 4) — Indian IT professionals, healthcare workers, engineers. India advocates relaxing visa restrictions in developed countries as equivalent to goods market access.

Investment Facilitation: India has opposed the Investment Facilitation for Development Agreement (IFDA) being negotiated as a plurilateral agreement — argues it should be transparent multilateral process.