In the recently released Special 301 report on trade and industry practices, the US Trade Representative (USTR) has stopped short of putting India on its Priority Foreign Country (PFC) list.
Under Special 301, USTR tracks the intellectual property (IP) rights record of countries and lists them according to the strength of their IP environment. If, on review, it identifies substantial deterioration in any country’s IP regime, it gets downgraded to PFC status which carries with it trade and economis sanctions.
India may have escaped being listed as such for now, but the Damocles sword hangs over the country as the USTR intends to conduct what it calls ‘out-of-cycle’ reviews to engage with India on IPR challenges.
Describing it as an unilateral probe under US law, which India is not committed to under WTO regulations, commerce secretary Rajeev Kher has ruled out India’s likelihood of being a party to the engagement. Instead, he insists that the issues can be discussed at US-India Trade Policy Forum.
The Indian government’s stance draws strength from a 1999 ruling of the WTO dispute settlement panel—in a dispute between the EU and the US—that a country cannot take unilateral action against another member country as it is inconsistent with WTO rules.
Just in case the US contemplates to impose sanctions on India, it will have to take the dispute to the WTO. Only if the multilateral trade body decides in the US’s favour can the country seek authorisation from the WTO and proceed against India.
By leveraging this rule, the Indian government can, at best, get a temporary reprieve. The mere implausibility of any action against us without WTO sanction does not make us any less vulnerable. What if the US goes to the WTO and the latter finds our regime to be non-compliant.
Indian authorities have said time and again that the country is compliant with the commitments being a signatory to the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) entails and that we have used flexibilities which are available to WTO members meaning that this is entirely ‘within the remit and commitments made by India under WTO agreements’. Yet, the US administration remains unconvinced.
We need to move away from ritual pronouncements (that at times become indistinguishable from rhetoric) to an objective and dispassionate analysis of whether our actions are truly in full compliance of the WTO norms.
There are three major areas of