Context:
U.S. and the EU have imposed Countervailing duties on Indian products against the RoDTEP scheme.
What are Countervailing duties (CVDs)?
- Tax or tariffs levied on imported goods to counter/offset the export subsidies given to producers of goods in the exporting country.
- They nullify the negative domestic impacts that producers of the same good might experience due to foreign competition.
- WTO allows imposition of CVD after a nation has investigated the subsidised exports.
Recently, in June 2023, UK government removed the counter duty for Stainless steel bars and rods imported from India.
WTO’s Agreement on Subsidies and Countervailing Measures (SCM Agreement):
- Only applies to measures that qualify as “subsidies”.
- Addresses 2 main aspects –
- Multilateral regulations regarding subsidies
- Use of countervailing measures against injury from subsidized imports.
- Multilateral disciplines set rules on subsidy provisions and are enforced through the WTO dispute settlement mechanism.
- Countervailing duties are imposed unilaterally by a member after investigating and satisfying criteria under the SCM Agreement.
What is the definition of Subsidy?
- Defined in the SCM Agreement as a financial contribution by a government conferring a benefit.
- Specificity determines whether a subsidy applies to a particular enterprise, industry, or region.
- Categories –
- Prohibited (e.g., export subsidies, local content subsidies)
- Actionable (subject to challenge or countervailing measures).
Actionable subsidies have the potential to inflict harm, bias, or negate advantages. Nonetheless, transition regulations offer exceptions or extended timeframes for developing nations and economies transitioning to market-based systems to gradually eliminate specific subsidies.
Directorate General of Trade Remedies (DGTR):
- National authority for administering all trade remedial measures
- A quasi-judicial body
- Formerly known as Directorate General of Anti-Dumping & Allied Duties (DGAD)
- Ministry – Ministry of Commerce & Industry
- 3 Trade remedial functions –
- Anti-Dumping Duty (ADD)
- Countervailing Duty
- Safeguards Actions[Safeguard Duty (SGD), Safeguards Measures (QRs)]
Source: The Hindu
Previous Year Question
With reference to the international trade of India at present, which of the following statements is/are correct?
1. India’s merchandise exports are less than its merchandise imports.
2. India’s imports of iron and steel, chemicals, fertilizers and machinery have decreased in recent years.
3. India’s exports of services are more than its imports of services.
4. India suffers from an overall trade/current account deficit.
Select the correct answer using the code given below:
[UPSC Civil Services Exam – 2020 Prelims]
(a) 1 and 2 only
(b) 2 and 4 only
(c) 3 only
(d) 1, 3 and 4 only
Answer: (d)
Explanation:
Export of iron and steel products witnessed a sharp rise of more than 100% in June 2020.
