New Delhi, July 22: India has received a formal request from the United States for consultations on phasing out of quantitative restrictions (QR) on its imports over five years.

The move follows the stalemate over discussions at the World Trade Organisation (WTO) balance of payments committee meeting in Geneva from June 30 to July 1. United States had threatened to drag India to the dispute settlement body of the WTO for persisting with a six-year period for removing the restrictions.

The consultations due to begin in September are to be completed within 60 days. This is in line with WTO procedures that encourage bilateral discussions among its member countries for sorting out disputes. If no agreement is reached, WTO will set in a motion a panel to decide the issue. The recommendations of the three-member panel shall be binding on the contending parties.

India's case will be represented by a delegation consisting of commerce secretary PP Prabhu and the joint secretary concerned with trade policy. The earlier meeting in June 10-11 in Geneva to consider India's phase-out plan over a period of nine years remained inconclusive. The committee's chairman therefore, decided to suspend the meeting till June 30.

The divergence of opinion among the member countries on a nine-year time frame proposed by India resulted in the discussions remaining inconclusive.

Some delegations expressed the view that India should immediately disinvoke use of BOP provisions of GATT, 1994, and indicated that they could accept a much shorter transition period of two to three years for removing these restrictions.

During the informal discussions at the latest round, India indicated that with view to reaching a satisfactory settlement, it would even agree to a phase out period of six years, as suggested by the BOP committee chairman, if there were to be an agreement provided the elimination of quantitative restrictions was to be in two phases of three years each.

However, disagreement continued on the number of tariff lines to be freed during the earlier years of the phase-out period. Considering the special problems facing the agricultural, textile sector and small-scale industry, the Indian delegation preferred elimination of the restrictions evenly in two phases.

However, the developed countries wanted heavy front loading of the items in the time schedule with only very few items in the sixth year. Effectively, they were therefore arguing for elimination of restrictions in five years, even though on paper it would seem as though India had the benefit of six years for phase out.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.