India will dispute US findings that claim New Delhi paid trade-distorting subsidies in the last seven years to its cotton farmers in excess of 10% permitted for developing countries. The US has alleged that India provides market price support or MPS for cotton “Vastly in excess of what it has reported to the World trade Organization (WTO)” and it ranged from 53-81% of the value of production from 2010-11 to 2016-17.
“We will dispute these findings strongly” said an officials in the know of the details.
This is the second counter-notification by the US attacking India’s subsidy numbers. In Maythe Trump administration had challenged India on the basis of support given to wheat and rice.
However, the latest salvo is being seen in the light of the US targeting the cotton subsidies given by African countries to their poor farmers “The US’ cotton subsidies have devastated African countries and hence, it is trying to shift the focus on us,” said another official.
In its latest counter to India’s subsidies, the US said: “India’s notifications for the years at issue appear to dramatically under-report the value of India’s MPS for cotton”.
For example, India’s notification for marketing year (MY) 2015-16 showed a value of support, converted from US dollars, of Rs 117.64 crore for cotton. By comparison, the US estimates that India’s MPS was Rs 50,415 crore for cotton in that year.
The dollar-rupee difference is there and the US has assumed that the entire production of cotton is eligible for subsidies, which is incorrect,” the second official added.
“The US wants India to report in rupee terms while India submits dollar-denominated numbers to the WTO. Depreciation of the rupee has helped us but the WTO does not mandate any particular currency,” said a Delhi-based expert on WTO issues.
The WTO Agreement on Agriculture defines subsidies on the total value of agriculture production while the US has challenged India on the basis of support given to individual products. Similarly, the agreement doesn’t specify the currency in which countries have to report their subsidy dole out.