Trump launches trade challenge against India’s export subsidy programmes

US President Donald Trump has yet again launched a trade challenge against almost all of India’s export subsidy programs.

He previously ranked up this issue that the US wants fair and reciprocal trade deals in context to Harley bikes.

On Thursday, he threatened retaliatory duties on countries that export more to the US than they import from it at the World Trade Organisation, indirectly naming India.

In a media statement released by the US Trade Representative Robert Lighthizer, "These export subsidy programs harm American workers by creating an uneven playing field on which they must compete."

The programs listed in the statement are:

• Merchandise Exports from India Scheme
• Export Oriented Units Scheme and sector-specific schemes
• Electronics Hardware Technology Parks Scheme
• Special Economic Zones
• Export Promotion Capital Goods Scheme
• Duty-free imports for exporters program

Through this above-mentioned programs, India provides exemptions from certain duties, taxes, and fees; reduces import liability and benefits numerous Indian exporters including producers of steel products, pharmaceuticals, chemicals, information technology products, textiles, and apparel, the statement said.

The statement also mentioned that exemption has benefited Indian exporters at over $7 billion every year. They even cited supporting documents from the Indian government.

Trumps Global Trade War

Trump triggered a global trade war by imposing tariffs on imported steel and aluminium earlier this month.

This met with stern reactions from world leaders.

In reaction to this statement of Trump, European Union threatened to slap a retaliatory tariff on everything from American jeans to whiskey and even the iconic Harley Davidson bikes.

Even China warned the US that it would take “justified and necessary response”.

WTO norms

According to WTO norms, some of the developing countries, like India, have the privilege of export subsidies.

This subsidy lasts till the country reaches desired economic benchmark.

The desired economic benchmark of WTO is gross national income per capita less than $1,000 per annum. 

Besides, this incentives can only be given to a sector that has a share of less than 3.25 percent in global exports.

The USTR claims that India surpassed the benchmark in 2015 and its exemption has expired. 

Also Read: US is 'getting nothing' says Prez Trump over Harley tariff