Trade officials from the U.S. and India continue working to conclude an agreement that could mean India would not have to pay a $450 million per year penalty for failing to comply with a World Trade Organization ruling, according to an Indian official.
If an agreement is reached, a compliance panel will be established, the official said. That panel will determine how much compensation — if any — India would have to pay the U.S.
The two countries are trying to settle a dispute over poultry imports from the U.S. That dispute started when India banned the import of frozen chicken legs from the U.S. to stop the spread of avian influenza. A WTO panel confirmed in June 2015 an earlier ruling that India’s ban was not based on international scientific standards, was more trade restrictive than necessary, and unfairly discriminated against U.S. imports. The country was given until June 2016 to lift the ban and follow international standards.
The U.S. recently asked the WTO dispute settlement body to allow $450 million in annual retaliatory trade measures against India until New Delhi complies with the WTO ruling to lift the ban.
At a special meeting of the dispute settlement body July 19, India objected to the $450 million figure, and the matter was referred to arbitration. That has taken longer than normal arbitration actions.
“The arbitrator should have ideally come out with a decision by August 19, but it is highly unlikely a decision will be taken this month,” a Geneva-based official told Bloomberg BNA. It’s more likely the two countries will come to an agreement on their own before the arbitration proceeds, officials said.
India told the WTO it believes it is conforming to the WTO ruling. India’s Department of Animal Husbandry issued a measure July 8 allowing India to import poultry products from the U.S. that comply with international standards set by the Terrestrial Animal Health Code of the World Organization for Animal Health (OIE). India also said the U.S. request to suspend concessions had no legal basis, a Commerce Department official from the Ministry of Commerce and Industry said.
The matter will now be taken up directly by Prime Minister Narendra Modi when he meets U.S. Secretary of State John Kerry during the upcoming Strategic and Commercial Dialogue to be held in New Delhi on Aug. 30-31, according to the Indian trade official.