New Delhi: India on Monday cautioned the US that Washington’s inconsistent positions in two separate trade disputes with New Delhi at the World Trade Organization (WTO)—concerning countervailing duty measures on certain hot-rolled carbon steel flat products from India and the restrictive measures imposed on American poultry products in the wake of the avian influenza scare in 2011—raise “systemic” issues and disrupt the “legal certainty” of global trade rules.

In 2014, the WTO’s highest adjudicative body—the Appellate Body—ruled against the US commerce department’s determination of “public body” in a dispute raised by India against the American countervailing duties on Indian hot-rolled carbon steel flat products.

“The US considers entities owned by the government (such as the National Mineral Development Corp. or NMDC) to be a public body, but the Appellate Body has found that the entity must have a government function,” Brenden McGivern, partner in global law firm White & Case LLP, said in an interview.

Consequently, the US is required to either amend or repeal that particular determination of public body—19 USC 1677(7)(G)(iii) in its domestic law—as per the Appellate Body’s ruling. The US is also required to file a status report at the WTO’s dispute settlement body (DSB) meeting, which takes place almost every month on whether it has implemented the DSB recommendation.

So far, the US has chosen not to provide any status report on its efforts to repeal or amend the controversial provision, India pointed out at a DSB meeting.

While the US continues to submit status reports on other major disputes—such as the US’s anti-dumping measures on certain hot-rolled steel products from Japan, its copyright provisions of Section 110(5), which pertain to working on statutory amendments to domestic laws that have been found to be inconsistent with its WTO obligations—Washington has not furnished any status report on the dispute with India.

“This is not a minor procedural issue but a serious systemic issue for the dispute settlement mechanism,” India pointed out, arguing that “ignoring this aspect would render Article 21.6 ineffective and seriously undermine the surveillance mechanism under the DSU (Dispute Settlement Understanding)”.

The US, on its part, maintained that it has not utilized the WTO-inconsistent domestic law in any probe concerning subsidies and countervailing duties.

India disagreed with the US assessment, and pointed out that the issue of non-utilization of a provision of a law is irrelevant in the context of implementation of dispute settlement body recommendations.

“It is disappointing to note different legal standards being pursued in different disputes (by the US) which pertain to essentially the same issue—a legislation which is WTO-inconsistent,” India emphasized.

India has also challenged the US’s decision to impose retaliatory levies adding up to $450 million on Indian goods when New Delhi has fully complied with the WTO’s recommendations.

It maintained that it had notified an order in the Official Gazette on 8 July that import of poultry and poultry products will be allowed from country, zones/compartments free of the avian influenza virus in accordance with the relevant international standards.

Thus, the US request for imposing retaliatory measures has no legal basis, India said, arguing that the proper course of action is to pose the issue to a compliance panel to determine whether India has fully implemented the ruling. Japan and the European Union concurred with India in its demand for determining whether New Delhi implemented the ruling.

“In fact, this has also been the position of the US in other disputes” including the recent US tuna case where Washington argued that “the DSB cannot grant authorization to suspend concessions in any amount where the member concerned comes into compliance”, India argued. “Not adhering to the sequence disrupts the legal certainty of the DSU.”

Against this backdrop, India sought the suspension of arbitration proceedings, but the US insisted that they must proceed. India’s “revised measure appears to retain many of the features of India’s prior measure that the DSB found to be inconsistent with India’s obligations under the SPS (sanitary and phyto-sanitary) agreement”, the US emphasized.

The chair for the dispute settlement body, ambassador Xavier Carim, said he had taken note of the arguments presented by both countries.