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Poultry imports: US refuses to drop $450m compensation demand

Poultry imports: US refuses to drop $450m compensation demand

NEW DELHI: The US has refused to drop its demand for $450 million annual compensation from India at the World Trade Organisation (WTO) for restricting its poultry imports and has alleged that New Delhi has not fully complied with the multi-lateral body’s ruling against the import barriers.

India, however, rubbished the claim and stated that it had already fully complied with the rulings and recommendations in the dispute and the US request for retaliatory action had no legal basis.

“In a meeting at the WTO headquarters in Geneva on Monday, India asked the Dispute Settlement Body (DSB) for an investigation into its compliance first instead of immediately conducting arbitration on the US request for retaliation,” a government official told BusinessLine.

Last month, New Delhi had made changes in its rules for import of poultry to bring them in conformity with a WTO ruling after the US threatened sanctions against the country for not implementing it within the stipulated time.

It removed import restrictions linked to risk from low pathogen avian influenza (bird flu) which the WTO had ruled unscientific. The Centre’s new notification states that the affected area would now be defined on the basis of the definitions provided in the Terrestrial Animal Health Code of World Organization for Animal Health (OIE) — the international standard setting body on animal health that is recognised by the WTO.

There may be scope for India to improve its notification by defining bird-flu affected area more specifically so that importers do not face any confusion, but it is certainly not a matter over which a retaliation request can be made, the official said.

“It is just a pressure tactic used by the US to keep India on its toes. If we are engaged in warding off imaginary devils, we will have less energy to fight cases like the one against the US on visa fee increase,” the official added.

The import restrictions on poultry lifted by India could open the doors for cheap chicken legs from the US, which could hit the local industry in a big way. According to industry estimates, the US could potentially take away 40 per cent of the market of domestic breeders who produce 3.5 million tonne of chicken annually.

The US, however, is not satisfied and has complained to the DSB that the revised measure appears to continue to impose import prohibitions on account of avian influenza outbreaks, contrary to the DSB’s findings on the OIE Terrestrial Code.

India also appears not to have taken any steps to address the DSB’s findings that its measure unjustifiably discriminates against imports in light of the conditions prevailing within India, it added.

The US, which is continuing to press for compensation, said that it remained in bilateral discussions with India to resolve the dispute.