India-US Bilateral Trade Agreement: WTO Law Angle
Why in the news
During PM Modi’s US visit on 13 February 2025, the two countries decided to open BTA negotiations. Scope is still vague, but the idea is a multisector deal rather than one focused mainly on liberalisation, as in an FTA.
Key facts
- Both countries are WTO members, so the BTA must respect GATT rules.
- Under the MFN principle, preferential trade deals are barred unless the WTO allows them.
- A BTA that lowers tariffs on only chosen goods would break WTO law unless it qualifies as an FTA.
- Trump-era reciprocal tariffs ran against MFN and Special and Differential Treatment (S&DT).
| Route | Rule | Condition |
|---|---|---|
| FTA | GATT Article 24.8(b) | Remove tariffs and barriers on substantially all trade |
| Interim agreement | GATT Article 24.5 | Firm timetable towards an FTA; reasonable period, maximum 10 years |
| Enabling Clause | Preferential treatment for developing countries | Possible fit because India would cut tariffs on US imports |
Concerns and way forward
- India should keep reductions selective only as part of a move towards an FTA.
- An interim deal that conflicts with MFN could be challenged in a dispute.
- As a backer of rules-based trade, India should resist pressure to deviate from WTO principles.
- The BTA must be drafted as a WTO-consistent FTA or a genuine interim agreement.
Exam angle
- Full forms: BTA, FTA, MFN, S&DT, GATT.
- Key articles: 24.8(b) and 24.5.