The Trump government’s announcement of steep tariffs on imports of steel and aluminium in the month of March has attracted retaliation from the majority of nations including India. In response to this duty imposition, India has dragged U.S. to the WTO (World Trade Organisation) over dispute settlement. Several other countries including Norway, China, and Russia have also filed disputes with WTO on the subject against U.S.
Seeking consultation is the first step in the dispute settlement process if two countries are not able to reach a mutually agreed solution. Thus, U.S. will hold consultations with India and other countries at WTO on 19- 20 Jul’18.
However, just ahead of this WTO meet, officials from India’s ministry of commerce & industry will meet U.S. trade representative (USTR)’s office on 16-17 July 2018 in Washington in order to resolve the issue of tariff imposition. This is because, after steel and aluminium tariffs imposition by U.S. as a retaliatory move, India has also notified import duties on 19 items from the US worth about USD 240 million. If talks fail, the import duty hike will come into effect from 4 August 2018.
The latest development suggests that for this upcoming meeting, India’s steel ministry has suggested three options for discussion to the Commerce Ministry. Stating that the U.S. move could lead to cross dumping into India, the ministry, as well as domestic industry representatives have agreed upon the following three measures:
1. India shall continue to emphasise that the imposition of 25% tariff needs to be withdrawn.
2. If this is not agreed upon, then primarily, India shall try to avoid the offer of U.S. government to restrict the overall exports to 70% of the average exports of the last three calendar years, i.e., 2015, 2017 and 2017. As it is a tacit acceptance of the trade actions per se and also because the administration of such quotas will be almost impossible.
3. However, in the last If ‘quota’ is the consensus that emerges among countries, then it should be non-restrictive, i.e., there should be no additional import tariff till 70% of the volume and anything over and above 70% can be subject to the additional import tariff.
U.S. tariffs can lead to cross-dumping in India
Although steel exports from India to U.S. is less than 1 MnT, Indian manufacturers fear that the 25% tariff imposition may result in steel dumping from South Korea which is one of the key steel exporters of U.S. and India both. With closed boundaries of U.S., Korea will opt for steel dumping in India.
Also while India has already imposed anti-dumping duty to prevent imports of major steel products, mostly from China and Taiwan, these duties are far from effective in the present scenario given the rise in global steel prices.
Let us understand this: Anti-dumping duty (ADD) is the price difference between the landed cost of imports and the price fixed by the government.
In April 2017, India has imposed anti-dumping duty (ADD) on imports of HRC below USD 489/MT which means that any HRC coming into India below USD 489 will attract anti-dumping duty.
However, a contrast here is that the price of HRC in the global market has risen to USD 600/MT in the current year. Thus, as the price fixed for ADD is lower than the global HRC price, anti-dumping duty has become ineffective. Supporting to this, the domestic price of HRC in the Indian market is hovering at USD 655/MT thus making imports once again an attractive option for the Indian buyers.
Leave a Reply