India-US negotiations on possible tariff exemptions next week
New Delhi: India will seek to convince the US to exempt it from steel and aluminium duty hikes at a bilateral meeting during a visit by assistant US trade representative (USTR) Mark Limscott to New Delhi next week.
The 10 April meeting in preparation of a Trade Policy Forum dialogue at the end of the year will be the first opportunity for the Indian side to put across its case for an exemption along the lines of the ones the US has granted to the European Union, Argentina, Australia, Brazil, Canada, Mexico and South Korea.
A commerce ministry official, speaking on condition of anonymity, said the US move to impose tariffs on the grounds of national security and then grant exemptions to its key allies is against World Trade Organization rules.
“But we cannot retaliate against the US like China, since the US is a valuable strategic partner. We will try to convince them as our business is getting hurt,” the official added.
China on Monday increased tariffs by up to 25% on 128 US products, from frozen pork and wine to certain fruits and nuts, escalating a trade dispute between the world’s biggest economies in response to US duties on imports of aluminium and steel.
According to calculations by US-based Peterson Institute for International Economics, India can retaliate against the US with $300 million of tariffs while China and Japan each are eligible to retaliate with tariffs of $700 million on US imports.
India, the world’s 14th largest steel exporter, sold iron and steel worth $320 million and aluminium worth $350 million to the US in 2016-17. The US ranked seventh as a destination for Indian steel, accounting for 5% of exports.
India’s commerce secretary Rita Teaotia last month said India was surprised and disappointed by the US decision to include it in a list of countries that will face higher tariffs on their exports of steel and aluminium although it is not a major exporter of these items to the US.
“Since the tariffs have been imposed on security grounds and some of the key trading partners have been excluded from that, on the basis of India’s strategic partnership with the US, we are certainly not a security threat to the US. So exemption to India should also be available on the same ground,” she added.
Earlier deputy USTR for Asia Wendy Cutler was supposed to lead the US delegation but she cancelled her visit. Both sides have since downgraded the talks to the joint secretary level.
Last year in October, India and the US had failed to issue a joint statement under the Trade Policy Forum dialogue due to unresolved differences, especially India’s move to control prices of medical devices like cardiovascular stents.
An HSBC survey released last month showed Indian companies are most concerned about rising protectionism across the world with nine in ten firms holding the view, against a global average of six in ten.