Significance of diplomatic resolution of India US trade dispute

Source: This article significance of diplomatic resolution of India US trade dispute has been created based on the article Settling trade disputes through ‘litigotiation’ published in The Hindu on 10^th June 2024.

UPSC Syllabus: GS Paper 2- International Relations- Bilateral relations between India and other countries

News: Recently, a decade old trade dispute between India and the U.S. was resolved at the World Trade Organization (WTO). This dispute originated in 2012 when the U.S. challenged India’s import restrictions on poultry products, imposed due to concerns over avian influenza.

What was the issue?

In this dispute, US alleged that India deviated from internationally recognized standards, by not providing scientific justification for restrictions.

Both the WTO panel and the Appellate Body ruled in favor of the U.S., stating that India’s measures were inconsistent with WTO rules.

It required India to modify its measures. However, compliance issues prolonged the dispute until a recent diplomatic breakthrough led to its resolution.

The dispute was resolved diplomatically, leading to withdrawal of claims by both countries, from WTO.

As part of the settlement, India agreed to reduce tariffs on certain U.S. products like cranberries, blueberries, frozen turkey, and premium frozen duck meat.

What is the significance of this diplomatic resolution between India and US?

It showcases the effectiveness of bilateral negotiations in resolving trade disputes. The resolution of this dispute represents a major diplomatic achievement, particularly given its long duration and complexity.

WTO rules encourage countries to resolve disputes amicably, with litigation only to be pursued as a last resort.

The significance of diplomatic solutions increases, especially in the absence of a functional WTO Appellate Body.

By this agreement, India is able to avoid a $450 million annual claim from the U.S., awarded by WTO to it.

It showcases the ability of major trading partners to navigate complex domestic compulsions and find common ground, even on the most sensitive trade matters.

This milestone reinforces the growing significance of the India-U.S. partnership, particularly in the context of the recently launched Indo-Pacific Economic Framework.