India Opens Market For US Farmers And Poultry Producers, Gets Little Benefits In Return

Joe Biden administration agreed to close the last and the most important trade dispute with India concerning chicken legs while refusing to restore the $6 billion trade benefits for Indian exports under Generalised System of Preferences (GSP) scheme

India-US Trade: In a far-reaching move showcasing strategic closeness between New Delhi and Washington DC, India has thrown open the poultry market to American farmers by agreeing to resolve the longest trade dispute ever between both countries that has been going on at the Geneva-based World Trade Organization (WTO) since 2007.

On Friday, the US announced that both sides have decided to close the last of six trade disputes there were filed by each other at the Dispute Settlement Body (DSB) of the WTO even as Biden landed in New Delhi on his maiden trip to India as the President of the United States for the two-day G20 Summit that began Saturday.

 While all trade disputes between both countries now stand resolved, India did not stand to gain much from the move. Even the $6 billion worth of trade benefits for Indian exporters under the Generalised System of Preferences (GSP) scheme was also not restored after being taken away in one strike by the former US President Donald Trump in 2019.

On Friday, as Biden landed in India, United States Trade Representative (USTR) Katherine Tai announced that the United States and India have agreed to resolve their last outstanding dispute – Measures Concerning the Importation of Certain Agricultural Products – at the WTO.

As part of the announcement, India will take steps to “reduce (import) tariffs” on a whole range of American agriculture produce such as frozen turkey, frozen duck, fresh blueberries and cranberries, frozen blueberries and cranberries, dried blueberries and cranberries, and processed blueberries and cranberries. 

While the decision was taken at the meeting between USTR Tai and Commerce and Industry Minister Piyush Goyal in August, the announcement was made on the occasion of President Biden’s visit to India.

India also agreed to reduce tariffs on certain US products, including chickpeas, lentils, almonds, walnuts, apples, boric acid, and diagnostic reagents, the Office of the USTR said in a statement.

“Resolving this last outstanding WTO dispute represents an important milestone in the U.S.-India trade relationship, while reducing tariffs on certain U.S. products enhances crucial market access for American agricultural producers,” said USTR Tai.

However, the US did not say a word in the official readout of the USTR on what it plans to do about India's demand for restoration of the GSP benefits that the US stopped abruptly. In January this year, during the 13th Ministerial-level meeting of the United States-India Trade Policy Forum (TPF) in Washington DC, Commerce and Industry Minister Piyush Goyal had requested the restoration of the GSP.

“India highlighted its interest in restoration of its beneficiary status under the U.S. Generalized System of Preferences program. The United States noted that this could be considered, as warranted, in relation to the eligibility criteria determined by the U.S. Congress,” the joint statement on the TPF said.

 What Was The Poultry Dispute All About?

In 2007, fearing an untimely death of the Indian poultry industry as the US started exporting and flooring the Indian markets with cheaply priced chicken legs to the Indian markets, the then UPA government in India imposed a sudden ban on them. It was done under the Indian Livestock Importation Act, 1898 as a safeguard measure against the spread of avian influenza. This triggered America to drag India to the WTO DSB.

According to the US Department of Agriculture, the American poultry industry is the world's largest producer and second largest exporter of poultry meat, and is a major egg producer. US consumption of poultry meat (broilers, other chicken, and turkey) is considerably higher than beef or pork but less than total red meat consumption. In 2022, nearly 15 percent of poultry meat produced in the US was exported.

At the WTO DSB, the US finally won the dispute in October 2014. But when India did not relent, America threatened to impose trade sanctions on New Delhi, which was then ruled by the Narendra Modi government.

The Biden administration in the recent months have signalled many times that it will not follow the global trading norms laid down by the multilateral body even as it sharpens its trade war with China. In 2018, Trump had even threatened to cancel the US' membership of the WTO.

Biswajit Dhar, Trade Economist, who has been following the US-India poultry dispute since the beginning told ABP Live: “By resolving the poultry dispute, we have lost even the last bargaining chip against the US on restoring the GSP benefits and other trading issues. The US basically wants to export chicken legs to India that are produced cheaply there.”

Dhar, who is former Head of the Centre for WTO Studies at the Indian Institute of Foreign Trade (IIFT), added: “The concerns due to which the chicken leg exports from the US were banned, those concerns still remain. Those concerns have not gone away anywhere. Our farmers will suffer once American exports start coming into the Indian markets. Anyway, there is a crisis in agriculture that has deepened, such a move weakens one leg.”