{"id":58012,"date":"2025-10-30T20:08:06","date_gmt":"2025-10-30T14:38:06","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=58012"},"modified":"2025-11-01T10:49:44","modified_gmt":"2025-11-01T05:19:44","slug":"chinas-complaint-against-india-at-wto","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/30-10-2025\/chinas-complaint-against-india-at-wto","title":{"rendered":"China\u2019s Complaint Against India at WTO"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>China <\/strong>has filed a complaint with the World Trade Organization (WTO) <strong>against India.\u00a0<\/strong><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>About<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>The three specific PLI schemes that China has challenged are:<\/strong>\n<ul class=\"wp-block-list\">\n<li>the PLI scheme which aims to incentivise the establishment of giga-scale manufacturing capabilities of ACC batteries in India;\u00a0<\/li>\n\n\n\n<li>the scheme for the auto industry, which seeks to buttress the manufacturing of Advanced Automotive Technology (AAT) products in India, encompassing both vehicles and their components;\u00a0<\/li>\n\n\n\n<li>and third, a scheme to promote EV manufacturing by attracting global EV manufacturers to the country.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Domestic Value Addition (DVA): <\/strong>Under the PLI scheme for the auto sector, one of the conditions for eligibility to get financial benefits is that there must be a<strong> 50% DVA.\u00a0<\/strong>\n<ul class=\"wp-block-list\">\n<li>Likewise, one of the salient features of the PLI scheme for ACC batteries is that the<strong> beneficiary must ensure a DVA of 25%.\u00a0<\/strong><\/li>\n\n\n\n<li>The Chinese argue that the<strong> DVA requirements incentivise companies to use domestic goods rather than imported goods,<\/strong> discriminating against Chinese goods in the Indian market.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Law on subsidies in WTO<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Legal Framework: <\/strong>Governed by the <strong>Agreement on Subsidies and Countervailing Measures (SCM Agreement) under the WTO.<\/strong><\/li>\n\n\n\n<li><strong>Sovereign Right vs. Fair Trade: <\/strong>While nations have the sovereign right to grant industrial subsidies to boost domestic industries, WTO law ensures these do not <strong>distort international trade or create unfair competition.<\/strong><\/li>\n\n\n\n<li><strong>Unfair Competition: <\/strong>Arises when subsidies artificially enhance competitiveness of domestic industries in exports or against imports.<\/li>\n\n\n\n<li><strong>Article 1 (Definition of Subsidy): <\/strong>A subsidy exists when there is a financial contribution by a government or public body, and it confers a benefit on the recipient.\n<ul class=\"wp-block-list\">\n<li>The subsidy must also be specific to an enterprise, industry, or group of industries.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>The SCM agreement divides subsidies into three categories \u2014 <strong>prohibited subsidies, actionable subsidies, and non-actionable subsidies.\u00a0<\/strong>\n<ul class=\"wp-block-list\">\n<li><strong>Prohibited subsidies are forbidden by definition and are generally of two types:<\/strong> export subsidies and Import Substitution (IS) subsidies.\u00a0<\/li>\n\n\n\n<li><strong>Export subsidies<\/strong> are contingent on export performance, and IS subsidies, as defined in Article 3.1(b) of the SCM agreement, refer to subsidies contingent upon the use of domestic goods over imported goods.\u00a0<\/li>\n\n\n\n<li>Thus, if a country promises a financial contribution to a specific industry on the condition that it uses domestic goods or goods produced locally, rather than imported goods, <strong>it would constitute a prohibited subsidy.<\/strong><\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>The SCM Agreement balances a country\u2019s right to support domestic industry with the need to prevent trade distortions, maintain a level playing field, and uphold fairness in global trade.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Do Import Substitution (IS) subsidies violate other laws?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>National Treatment Rule (GATT Article III.4): <\/strong>Every country must treat imported goods and domestic goods equally.\n<ul class=\"wp-block-list\">\n<li>So, a country cannot make laws that give better treatment to local products than to imported ones.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>TRIMs Agreement (Article 2.1): <\/strong>This rule says countries cannot make investment policies that go against the national treatment rule of GATT.\n<ul class=\"wp-block-list\">\n<li>The TRIMs Agreement even gives an example \u2014 local content requirements, which force or encourage companies to use local goods instead of imports.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>Because an IS subsidy gives special benefits only when local goods are used, it is <strong>treated as a banned (prohibited) measure under WTO law.<\/strong><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>WTO Dispute Settlement Process<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Consultations: <\/strong>India and China must first engage in consultations to resolve the issue amicably.<\/li>\n\n\n\n<li><strong>Adjudication by WTO Panel:<\/strong> If consultations fail, a three-member ad hoc WTO panel is constituted to adjudicate.<\/li>\n\n\n\n<li><strong>Appeal to Appellate Body:<\/strong> However, the WTO Appellate Body has been non-functional since 2019 (due to U.S. opposition to new appointments).\n<ul class=\"wp-block-list\">\n<li>If either party appeals the panel\u2019s ruling, the dispute enters a \u201c<strong>legal limbo\u201d until the Appellate Body is revived.<\/strong><\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>Thus, if the WTO panel\u2019s decision is appealed, it would mean postponing the adjudication of the dispute till the time the Appellate Body is resurrected.\u00a0<\/li>\n\n\n\n<li>The practical implication is that the status quo remains, and a country can continue with its impugned measures.<\/li>\n<\/ul>\n\n\n\n<p><strong>Source: <\/strong><a href=\"https:\/\/www.thehindu.com\/news\/international\/what-is-chinas-complaint-against-india-at-wto-explained\/article70218390.ece#:~:text=It%20alleges%20that%20India%20is,in%20contravention%20of%20WTO%20law.\" target=\"_blank\" rel=\"noopener\"><strong>TH<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p><strong>Context<\/strong><\/p>\n<li class=\"ms-5\">China has filed a complaint with the World Trade Organization (WTO) against India.\u00a0<\/li>\n<p><\/p>\n<p><strong>Law on subsidies in WTO<\/strong><\/p>\n<li class=\"ms-5\">Legal Framework: Governed by the Agreement on Subsidies and Countervailing Measures (SCM Agreement) under the WTO.<\/li>\n<li class=\"ms-5\">Sovereign Right vs. Fair Trade: While nations have the sovereign right to grant industrial subsidies to boost domestic industries, WTO law ensures these do not distort international trade or create unfair competition.<\/li>\n<li class=\"ms-5\">Unfair Competition: Arises when subsidies artificially enhance competitiveness of domestic industries in exports or against imports.<\/li>\n<li class=\"ms-5\">Article 1 (Definition of Subsidy): A subsidy exists when there is a financial contribution by a government or public body, and it confers a benefit on the recipient.<\/li>\n<p><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/30-10-2025\/chinas-complaint-against-india-at-wto\" class=\"btn btn-primary btn-sm float-end\">Read\u00a0More<\/a><\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-58012","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/58012","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=58012"}],"version-history":[{"count":2,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/58012\/revisions"}],"predecessor-version":[{"id":58040,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/58012\/revisions\/58040"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=58012"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=58012"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=58012"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}