Home / Politics / Policy /  India may move WTO as US fails to abide by verdict on steel import duty

New Delhi: India is planning to approach the compliance panel of the World Trade Organization (WTO) as the US has failed to amend its domestic regulations to comply with a WTO appellate body verdict on countervailing duties (CVDs) on imports of hot-rolled carbon steel products from India.

The move comes close on the heels of the US dragging India to the arbitration panel for its alleged failure to remove trade restrictions on American poultry.

“We have studied the CVD on Indian steel products case and have found that the US has not complied with the WTO appellate panel ruling. We had given them 16 months to comply with the judgement, which expired in March this year. We are considering to move to the compliance panel against the US on the matter," a government official said, requesting anonymity.

Last month, the US sought authorization to impose trade retaliatory measures worth $450 million on Indian goods as India failed to comply with the WTO ruling within the stipulated time. However, India has disputed the US claim, saying the delay was of only of a few days in notifying the compliance. The department of animal husbandry, dairying and fisheries had on 8 July notified fresh norms for the import of poultry and poultry products. Both sides held discussions through video conferencing on 20 July to resolve the issue bilaterally. However, the government official said the US side is yet to respond.

In December 2014, India secured partial relief in its trade dispute with the US at the WTO over CVD imposed by the US on certain hot-rolled carbon steel flat products. While the appellate body disputed India’s challenge against an earlier ruling that upheld the US’s countervailing measures on Indian hot-rolled steel flat products, it disputed the way the US calculated CVD.

“The implication of this ruling is that the US has to amend its domestic law to be WTO compliant and so far as the pending and the future CVD investigations are concerned, the same would be subject to challenge if cross-cumulation (of subsidies) is applied again. It has significant trade impact for India as out of the current 10 products on which US has imposed CVD, about seven products suffer from the same inconsistency," India’s trade ministry said in a December 2014 statement after the verdict.

The official cited above said India has signed a sequencing agreement with the US on the ruling which means India will first approach the compliance panel and only then can it go for arbitration. “We had requested the US to sign a similar sequencing agreement in the poultry case also, but it refused," he said.

Anwarul Hoda, a professor at the Indian Council for Research on International Economic Relations (ICRIER), said India should take the US to the compliance panel as early as possible since steel is a cyclical product and the domestic industry is suffering from high imports. “Wherever there is an opportunity for safeguarding the country’s interest by following due procedure, India should go ahead," he added.

On 5 February, the government imposed minimum import duty on 173 steel products for a period of six months in a bid to curb the dumping of cheap steel by countries such as China, Russia, Japan and South Korea. The government is currently reviewing whether to extend the duty amidst protests by small and medium enterprises using steel as an input complaining of increasing cost of production.

Both the US and India have bitterly fought over bilateral and multilateral fora on issues of trade, climate change and intellectual property rights in recent years.

After consecutively losing two cases to the US at the WTO on its ban on US poultry imports claiming bird flu fears and the subsidy programme for domestic solar panel makers in June last year and January this year, respectively, India took the US to the WTO over Washington’s alleged trade-restrictive measures of hiking professional visa fees which though not targeted only against India ends up affecting mostly Indian software professionals.

So far, the US has raised six trade disputes at the WTO against India and encountered eight cases from New Delhi.

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