India and China seek level playing field on US’ CHIPS ACT

India has raised objection to the United States’ $280 billion ‘Chips for America’ programme, claiming it violates World Trade Organisation (WTO) provisions and puts competitive manufacturers at disadvantage.

New Delhi raised the issue during the recent Trade Policy Review of the USA, seeking clarifications from the US on the ambitious CHIPS Act.

“This (Chips Act) puts more competitive manufacturers globally at a distinct disadvantage. What steps are proposed to be taken to create an even playing field for global manufacturers in these areas, especially from the developing world?” India asked.

China too has raised objections.

“China notes that the US has continuously criticized the industrial subsidy policies of other members on various occasions over the years. Please clarify whether the consistent position of the U.S. has changed,” Beijing asked.

The US, however, denied the charge.

In reply, the US said it “intends to administer the Act in a manner that is consistent with U.S. law and with U.S. commitments under the WTO Agreements.”

“The United States disagrees with the characterization in this question. Like all other WTO Members, the United States may provide support in a manner that is consistent with its commitments under the WTO Agreement. The United States intends to administer the two referenced Acts in a manner that is consistent with U.S. law and with U.S. commitments under the WTO Agreement.

“In addition, the CHIPS and Science Act includes an International Technology Security and Innovation Fund to support international information and communication technology security and semiconductor supply chain activities,” it said in its reply.

Disruptions in the production and delivery of semiconductors created problems for several domestic manufacturing activities, including vehicles, medical devices, and other products during and after the pandemic.

This led to the US lawmakers enacting the Creating Helpful Incentives To Produce Semiconductors For America Act, or CHIPS for America Act, which authorizes the government to award financial assistance to private entities or public-private consortia to finance, construct, expand, or modernise facilities to support the fabrication; assembly, test, and packaging; and advanced packaging of semiconductors.

India and the US have also signed a Memorandum of Understanding (MoU) earlier this month on establishing semiconductor supply chain and innovation partnership under the framework of India-US Commercial Dialogue.

The MoU seeks to establish a collaborative mechanism between the two governments on semiconductor supply chain resiliency and diversification in view of US’s CHIPS and Science Act and India’s Semiconductor Mission.

“It aims to leverage complementary strengths of both countries and facilitate commercial opportunities and development of semiconductor innovation ecosystems through discussions on various aspects of the semiconductor value chain. The MoU envisages mutually beneficial R&D, talent and skill development,” the commerce department had said in a statement. Business Standard