India & the World Trade Organization |
QRs - A Fact Sheet Article XI of the GATT provides for the general elimination of quantitative restrictions (QRs) on imports, stipulating that imports may be controlled only through tariffs. There are, however, a number of exceptions to the stipulations against QRs in Article XI. One important exception is a situation where a country has to safeguard its external finance position as elaborated in Article XII (used by developed countries) and Article XVIII:B (used by developing countries). Article XVIII:B, which is invoked by India, recognises that members whose economies can only support lower standards of living and are in the earlier stages of development may "apply quantitative restrictions for Balance of Payments Position...(and)...shall be free to deviate temporarily from the provisions of the other Articles of this Agreement as provided in Sections A, B & C". Para 9 of Section B provides that such member countries may control the general level of imports by restricting the quantity or value of merchandise permitted to be imported, provided that the import restriction shall not exceed those necessary: (a) to forestall the threat of, or to stop, a serious decline in its monetary reserves; or (b) in the case of a contracting party with inadequate monetary reserves, to achieve a reasonable rate of increase in its reserves. The provisions relating to balance of payments also provide that a member has to announce publicly time-schedules for the elimination of QRs maintained for balance of payments purpose. A member taking recourse to Article XVIII:B is also required to have periodic consultations with the Committee on Balance of Payments Restrictions in the WTO. India presented a case for the removal of QRs for the period 9 years initially in May 1997, subsequently reduced to 7 years. As even 7 year phase-out period was not acceptable to developed countries and the US, EC, Canada, Australia, New Zealand and Switzerland (with Japan seeking third party status in the dispute) initiated disputed settlement proceedings against India. India has reached an agreement with all countries except the US. Under the mutual solution reached with the 6 major trading partners, India has entered into a phase-out programme of 6 years starting from 1997-i.e., 2003. Regarding the dispute filed by US, the interim report of the panel is under examination. Safeguard measures to protect domestic industry following the gradual phase-out of QRs on imports are proposed to be utilised effectively. These measures available under the WTO regime include protection through tariffs, anti-dumping and countervailing measures and safeguard measures to prevent damage to domestic production on account of surge in imports. Non-tariff barriers in countries for products of export efforts to India are taken up bilaterally or through the WTO dispute settlement mechanism for appropriate action. |