India-U.S. trade agreement and WTO law test

• Prime Minister Narendra Modi and the U.S. agreed to negotiate the first stage of a multi-sector Bilateral Trade Agreement (BTA) by the fall of 2025.
• The BTA is governed by the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO).
• The scope of the BTA is unclear, with the U.S.-India Joint Leaders Statement only referencing a multi-sector BTA without providing specific details about its coverage.
• The BTA must cover “substantially all trade” to be legally valid and must be notified to the WTO.
• The proposed BTA could be notified as an ‘interim agreement’, leading to the formation of an FTA, subject to specific conditions.
• The ‘enabling clause’ allows WTO countries to deviate from the MFN principle if it is meant to provide better market access to the products of developing countries.
• The proposed India-U.S. BTA may not fall under the ‘enabling clause’ as both sides are expected to lower tariff rates on each other’s products.
• The U.S.’s concept of’reciprocal tariffs’ violates the core WTO principles of MFN and special and differential treatment (S&DT).
• India, championing a rule-based trading order, needs to actively push back against any dilution of core WTO principles.