U.S. Wins WTO Case Against India Over its $7 Billion in Export Subsidies
India's economy has grown too large to continue receiving preferential treatment, a trade dispute panel ruled.
The U.S. won a case against India at the World Trade Organization alleging improper use of export subsidies valued at more than $7 billion.
The WTO’s dispute-resolution panel agreed that “India gives prohibited subsidies to producers of steel products, pharmaceuticals, chemicals, information technology products, textiles, and apparel, to the detriment of American workers and manufacturers,” the U.S. Trade Representative in Washington said in a statement Thursday.
WTO rules prohibit export subsidies, but makes exceptions for developing countries until they reach certain economic benchmarks. India’s exemption expired, according to USTR, and the Geneva-based trade body rejected the country’s position that it was entitled to more time even after hitting the threshold.
The case was filed in March 2018 by the U.S., challenging what it said were illegal export subsidies provided to Indian firms. The decision, which can be appealed, comes amid a broader deterioration in trade relations between the U.S. and India.
The Trump administration earlier this year canceled India’s preferential access to the U.S. market under a scheme for developing countries and since then the two sides have been engaged in stop-start negotiations to resolve their differences.
Hopes were raised in September that a deal is close after President Donald Trump attended a rally for Indian-American voters in Texas with Narendra Modi, the Indian prime minister. But the deal has yet to materialize.
India, meanwhile, is engaged in negotiations with China and Southeast Asian nations over a new Regional Comprehensive Economic Partnership. The country, which is facing a political backlash at home, is driving a tough bargain. RCEP would create a vast free-trade bloc spanning the Indo-Pacific from New Zealand in the east to India in the west and China and Japan to the north.
More must-read stories from Fortune:
—U.S. and China to finally sign a trade war truce, Trump Says
—Sherrod Brown has advice for 2020 Candidates on winning Ohio
—Voters over 65 remember Nixon—and want to impeach Trump
—How Mitch McConnell could use impeachment to scramble the Democratic primary
—2 House immigration bills face uncertain fates
Get up to speed on your morning commute with Fortune’s CEO Daily newsletter.