Faced with a compensation demand of $450 million annually from the US for alleged non-compliance with the World Trade Organisation’s verdict on the dispute over poultry imports, New Delhi is in consultations with Washington to sort out the matter bilaterally.

If unable to convince the US that its new import measures are in line with the WTO’s ruling, New Delhi is likely to seek a compliance panel at the WTO to establish that it had not erred in its implementation and the request for retaliation was unjustified, a government official told BusinessLine.

The Department of Animal Husbandry is in talks with the US Trade Representative office on the restrictions on poultry imports it believes still exist in India despite changes being notified by the department last month to bring them in line with the WTO’s ruling last year.

“More changes could be made in the import rules to satisfy the US. However, if the country raises unreasonable demands, we will fight it out at the compliance panel,” a government official said.

Last year, the WTO had ruled against India’s ban on poultry imports, which aimed to protect the country from low pathogen avian influenza (bird flu), as the dispute panel agreed with the US that the restriction did not have any scientific justification.

New import norms

When India did not make any changes in its import rules till June this year, the deadline given by the WTO for compliance, the US threatened to take retaliatory action. Following the threat, New Delhi made several changes in its import rules on poultry to bring them in line with global norms.

However, the US is still not satisfied and has thus not withdrawn its demand for compensation.

As part of India’s compliance measure, a new notification by the Animal Husbandry Department has dropped its earlier definition of bird flu based on low-pathogen bacteria.

Instead, the new notification states that bird flu and the areas affected by it will henceforth be defined on the basis of the definitions provided in the Terrestrial Animal Health Code of the World Organisation for Animal Health (OIE) (which defines bird flu on the basis of high-pathogen or highly infections bacteria). This change in classification could open the doors to cheap chicken legs from the US that would give the country’s over four lakh local poultry breeders, producing an estimated 3.5 million tonnes of chicken every year, a run for their money.

Simplifying rules

The US, however, is not satisfied with the new classification and wants even further simplification of rules.

“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. Given the revised measure, like the original measure, does not appear to be based on a risk assessment, India would appear to have no basis for imposing its import restrictions on US agricultural products,” the US said in its recent representation to the DSB.