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In a recent
inter-ministerial meeting on ASCM issues, the Planning
Commission pointed out that these proposals may capture
export duty restrictions on even on primary products, such
as, hides and skins and wooden logs, and any prohibition on
such export duty may have serious implications on the
domestic industry.
ASCM allows duty free import of inputs, which are physically
incorporated into the product, and items like energy, fuels,
oils and catalysts used to manufacture export product.
The Article 3 of the ASCM defines two categories of
subsidies as prohibited subsidies. The first category
consists of subsidies that are contingent on export
performance and the second category consists of subsidies
for use of domestic goods over imported goods (“local
content subsidies”).
As product specific subsidies directly affect trade and are
most likely to have adverse effects on the interests of
other WTO members, the ASCM deals more stringently with
these subsidies and these are termed as prohibited
subsidies' by the WTO SCM agreement.
According to the ASCM, if a country grants or maintains
prohibited subsidies, then other member countries can
initiate remedial actions against the errant country.
The EC has now proposed that financial subsidies provided to
industries that would have a bearing on the operating costs
of the companies should also be prohibited.
Sources said that the steel ministry has also voiced concern
about the proposal to widen the scope of prohibited subsidy
as there was need for dual pricing in iron ore supply to
domestic steel manufacturers.
The commerce ministry, which has sought comments from
ministries and various stakeholders, has initiated the
process of hammering out suitable reply to the EC’s
proposals.
“The commerce ministry is now trying to draw out the
negotiating contours in the wake of the EC’s proposals.
Several key questions have emerged during the last in ter-ministerial
meeting. For instance, the likely impact of such prohibition
of subsi dies on domestic policy choices needs to be clearly
projected. Besides, if India wishes to keep policy options
open for future, the gov ernment need to firm up the grounds
on which such flexibility would be sought. There is also the
question of impact on do mestic trading community”, sources
pres ent in the meeting told Hindustan Times. |
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