India asks WTO to set up panel against US

India asks WTO to set up panel against US

Kamaraj IAS Academy | India asks WTO to set up panel against US
  • November 22, 2018, 11:24 am

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India asks WTO to set up panel against US for imposing higher duties on steel, aluminium. India claims that, the US duties of 25% and 10% on imports of steel and aluminium products respectively are inconsistent with provisions of the WTO's General Agreement on Tariffs and Trade (GATT) 1994 and of the Agreement on Safeguards.

General Agreement on Tariffs and Trade (GATT) was a legal agreement between many countries, whose overall purpose was to promote international trade by reducing or eliminating trade barriers such as tariffs or quotas. This tries to accomplish free market trade without barriers and ensure fair trade happens across the nations.

GATT, and its successor WTO, have successfully reduced tariffs. The average tariff levels for the major GATT participants were about 22% in 1947, but were 5% after the Doha round in 2001.

 

What’s the case?

 

Earlier US President Trump imposed the tariffs levying 25% on steel import and 10% on aluminium. While imposing the tariffs, US justified it by saying that it’s a matter of national security and hence it is the ‘safeguard’ under WTO rule and out of purview the WTO’s remit.

 

This imposition of high import duties affected the exports of Indian businesses of these products. And India believes that US move is not in compliance with global trade norms.

 

It is estimated that India exports steel and aluminium goods worth about $1.6 billion a year to USA.

 

India, Russia, Japan, China, European Union and Turkey have all dismissed US claim regarding the U.S. tariffs as ”safeguards” under the WTO rules, entitling them to a combined $3.5 billion in annual compensation. They dragged the US in the WTO for tariff imposition which triggered global trade tensions.

In retaliation to the imposition of duties by the US, India had decided to increase customs duty on 29 American products such as almond, walnut, pulses and iron and steel items.The duties would come into effect from December 17.It is also to be noted that india maintains a trade surplus with that of U.S(ie; India's exports to the US in 2017-18 stood at about $48 billion, while imports were $26.7 billion. )

 

The Dispute Settlement Body of WTO, which will meet in Geneva on Wednesday, will examine all the requests. If the US rejects the first-time requests, members will have to file a second request in the next meeting, which would not be allowed to be rejected and panels will be subsequently constituted.

 

It is to be noted that, India is unlikely to sort out the aluminium and steel dispute with the US through the retaliation route with u.s having an upper hand in WTO. Although WTO disputes take a long time to get results, it seems to be the only feasible option.Both countries are also involved in several other disputes in the WTO, including in the areas of poultry, export incentives, solar and steel

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