India seeks amendments in the domestic laws of countries that permit unilateral action on trade matters
US has unilaterally hiked aluminium and steel tariffs on many countries including India
In a veiled attack on the US at a time trade tensions between the two nations are at a peak, India has urged the World Trade Organization (WTO) to ask member countries to amend their domestic laws that permit unilateral action on trade matters.
“Laws and regulations of WTO Members which mandate unilateral action on trade issues that are inconsistent with WTO rules would need to be amended. This will ensure that WTO Members are not perpetually under threat of unilateral action on trade issues by some members," India said in a concept paper presented to the General Council of WTO on 11 July that was supported by members such as South Africa, Zimbabwe, Cuba, Bolivia, Ecuador, Malawi, Tunisia and Uganda.
The US on 8 March 2018 unilaterally hiked aluminium and steel tariffs by 10% and 25%, respectively on many countries including India under the controversial Section 232 of national security provisions of the Trade Expansion Act, 1962 signed by then president John F. Kennedy. The section authorizes the US president to increase tariffs on import of goods from other countries if it deems the quantity or circumstances surrounding those imports to threaten national security.
China, Russia, the European Union, Norway, Turkey and Switzerland have also dragged the US to WTO dispute settlement body, alleging its unilateral sanctions are inconsistent under its WTO obligations. In December, the WTO set up a dispute panel to resolve the matter after the US initially blocked India’s first request for such a panel.
“This collective resort to dispute settlement reflects the serious concern of the WTO Membership over the United States’ actions," India said at that time, emphasizing that “it also reflects trust and confidence in the WTO as forum for resolving international trade disputes." It called for a “single panel" to rule on the US tariffs, as all the complaints are related to the same matter.
While the US has argued that the tariff hikes are under Article XXI of WTO rules which allows “security exceptions" to member countries, aggrieved members have argued that the tariff hikes are safeguard measures meant to protect American steel and aluminium industries and hence violate WTO rules.
India has imposed retaliatory tariffs on 28 products worth $217 million in June, a year after announcing the measures. Both countries were engaged in negotiations almost for a year to hammer out a trade package which would waive the tariff hikes for India and protect the duty-free market access to Indian exporters to the US under the Generalized System of Preferences (GSP). However, after the talks broke down over disproportionate demands from the US government, the US withdrew GSP benefits to India and India imposed the retaliatory tariffs which it kept suspended hoping for a trade deal.
Both sides revived trade talks at the official level earlier this month though there was no breakthrough. The commerce ministry stated that assistant US trade representative (USTR) Christopher Wilson was on a visit on 11-12 July to “explore potential for enhanced bilateral trade and economic engagement with India under the new government". Prime Minister Modi and President Trump had resolved to provide impetus to bilateral trade ties during their meeting at Osaka, Japan at the sidelines of the G20 summit on 28 June. Trade minister Piyush Goyal is expected to visit US in August to meet his counterpart USTR Robert Lighthizer to narrow down differences between the two sides.
“I think, we are at a pivotal juncture here in our relationship and at a critical intersection between a frustrating last few years that we have had and a possible future relationship that at this point is not really defined and is still being tested," PTI reported quoting Gerrish.
India has imposed retaliatory tariffs on 28 US products, including almonds and apples, starting 5 June, a year after announcing them to counter the increase in steel and aluminium tariffs by the US and the withdrawal of duty-free benefits to Indian exporters. Following the move, the US raised the dispute at the World Trade Organization (WTO). India also raised customs duties on a host of products, including alloy steel and auto parts, in the budget presented on 5 July.