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WTO Compliant Schemes for the Textiles Sector WTO Compliant Schemes for the Textiles Sector

WTO Compliant Schemes for the Textiles Sector - PowerPoint Presentation

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WTO Compliant Schemes for the Textiles Sector - PPT Presentation

A Presentation by Jayant Dasgupta Executive Partner WTO Definition of Subsidies Financial contribution by the government or any public body Direct or potential direct transfer of funds Government revenue foregone or not collected ID: 502598

subsidies export schemes india export subsidies india schemes wto section product government competitiveness developing actionable goods phase headings 2018

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Presentation Transcript

Slide1

WTO Compliant Schemes for the Textiles Sector

A Presentation by

Jayant Dasgupta

Executive PartnerSlide2

WTO Definition of Subsidies

Financial contribution by the government or any public body

Direct or potential direct transfer of funds

Government revenue foregone or not collected

Government provides goods or services other than general infrastructure, or purchase of goods

Government makes payments to a funding mechanism

Any form of income or price support

Must result in a BENEFIT CONFERREDSlide3

WTO Permissible Subsidies

ACTIONABLE

NON-ACTIONABLE:

(a) Subsidies which are NOT SPECIFIC, i.e. not available only to an enterprise or industry or group of enterprises or industries,

(b) Assistance for research activities,

(c) Assistance to disadvantaged regions,

(d) Assistance for adaptation to new environmental requirementsSlide4

Prohibited Subsidies- WTO

SUBSIDIES CONTINGENT UPON EXPORT PERFORMANCE,

i.e

tied to actual or anticipated exportation or export earnings

*

SUBSIDIES CONTINGENT UPON USE OF DOMESTIC OVER IMPORTED GOODS

*Developing countries are exempted if: (a) they are LDCs or (ii) their annual per capita income is less than US$ 1000 Slide5

Phase out of Export Subsidies by Developing Countries

I

f

a developing country attains

EXPORT COMPETITIVENESS

in a product, i.e. a share of at least 3.25% in world trade in that product for two consecutive calendar years, export subsidies in that product will have to be phased out over a period of 8 years.

A

product is

defined as a SECTION HEADING

of the ITC HS system

.

Export

competitiveness could be

declared by a Member through filing its schedules or computed

by the Secretariat at the request of any Member.Slide6

Present status of Indian Export Subsidies

For Section XI, India has attained export competitiveness in 2006 and 2007, though it did not notify it

The US asserted in 2011 that India had attained export competitiveness in the textiles and clothing sector and requested the Secretariat to compute India’s share in global trade

The WTO Secretariat’s calculations showed that India had crossed 3.25% for two consecutive calendar years 2010

and

2011 for Section XI

In the ITC HS nomenclature, there are SECTIONS (e.g. Section XI dealing with all textile and clothing products in Chapters 50 to 63), CHAPTERS or TARIFF HEADINGS (at 4 digit level

)

India

sought a clarification on the interpretation of “Section Heading

”. For a large number of Cotton Based Tariff Headings, India has crossed 3.25%, though not for some Non-Cotton Tariff Headings

India will perhaps have to phase out its export subsidies by 2018 or face dispute action. Slide7

WTO Compliant Schemes-some suggestions

During the phase-out period, a developing country is not expected to introduce new schemes or increase the quantum of export subsidies.

By amalgamating five existing export subsidy schemes, India has just announced the Merchandise Exports from India Scheme (MEIS), which can be considered to be a re-designation of old schemes and thus can continue till 2018.

Existing Schemes such as EPCG (duty foregone for future exports) are likely to come under attack after

2018 being a prohibited export subsidy.

(RRTUFS to be phased out by 2017 according to guidelines).

Any new schemes would have to be either general (and not specific) or come under one of the exceptions (research/disadvantaged regions/environmental

adaptation)for not being countervailed.

Specific subsidies are actionable subsidies and are likely to be countervailed, thus eroding any advantage for our exporters in the

importing country.Slide8

Thank You