Geneva: As the Trump administration threatened to take unilateral crowbar trade actions against auto and automotive parts manufacturing countries, India has dragged the US to the World Trade Organization (WTO) over Washington’s controversial additional duties on import of steel and aluminium.
Late on Wednesday evening, US President Donald Trump pressed ahead with alleged unilateral trade actions by ordering investigations into imports of autos, trucks and auto parts, under the Section 232 provisions, which deals with the country’s national security.
Despite growing concerns over the earlier additional duties of 25% and 10% on steel and aluminium, respectively, under the controversial Section 232 provisions, the Trump administration decided to investigate whether “core industries, such as automobiles and automotive parts, [which] are critical to our strength as a Nation" are being undermined by imports.
According to a 24 May report in Washington Trade Daily, “the investigation will determine whether imports of automobiles, including SUVs, vans and light trucks, and automotive parts into the United States threaten to impair national security as defined in Section 232".
If the findings of the investigation into autos and auto parts are in line with Trump administration’s views, the US could slap additional duties of 25% on autos and automotive parts. India which is a major supplier of auto parts.
“There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry," US Commerce Secretary Wilbur Ross said in a statement issued on 23 May. “The Department of Commerce will conduct a thorough, fair and transparent investigation into whether such imports are weakening our internal economy and may impair national security."
The commerce department maintained that imports of vehicles increased by 32 per cent over the past 20 years, while employment during 1990 and 2017 declined by 22 per cent.
“The investigations will consider whether the decline of domestic automobile and automotive parts production threatens to weaken the international economy of the United States, including by potentially reducing research, development and jobs for skilled workers in connected vehicle systems, autonomous vehicles, fuel cells, electric motors and storage, advanced manufacturing processes and other cutting-edge technologies," the WTD said.
Clearly, Section 232 seems to have been weaponised for ensuring support of American workers in key states ahead of the mid-term elections to the US Congress “If they [the US] were to go ahead with such wide-ranging trade restrictions, it would throw the global market into confusion," said Hiroshige Seko, Japan’s minister of economy, trade and industry. “There could be a negative effect on the WTO multilateral trading system. It is extremely regrettable."
In a separate development, India launched dispute settlement proceedings against the US at the WTO on 18 May. New Delhi argued that Washington’s controversial additional duties for adjusting the imports of steel and aluminium violated global trade rules, especially the safeguards agreement.
In an Article 4 request filed with the chairperson of the disputes settlement body, India said the decision of the US to impose 25% and 10% additional duty on certain steel and aluminium products from all countries barring Canada, Mexico, Australia, Argentina, South Korea, Brazil and the European Union, from 23 March, violated core WTO rules.
According to India, the US measures on steel and aluminium based on Section 232 security provisions violated core provisions in several WTO agreements.
The US will need to enter into consultations with India in the next 60 days to address specific issues raised in the complaint. India could call for establishing a panel if the two sides fail to reach an amicable agreement.
The US also called for a disputes settlement panel to adjudicate over India’s alleged export subsidy schemes for various sectors in violation with global subsidy rules.
In a compliant filed with the disputes settlement body on May 17, the US said the consultations with India on April 11 had failed to resolve the concerns raised by Washington. Consequently, the US said it is compelled to seek the establishment of a panel to adjudicate India’s various export subsidy schemes that are allegedly inconsistent with global trade rules.