India must take corrective measures as it acted ‘inconsistently’ with certain global trade provision: WTO

India must take corrective measures as it acted ‘inconsistently’ with certain global trade provision: WTO

  • WTO dispute panel found India guilty of implementing an ‘inconsistent’ import duty hike on imported steel.
  • Now India has the option to either appeal or follow the corrective measures suggested by the panel.
  • The panel was set up after Japan and India failed to resolve the issues through bilateral talks.
  • Japan had earlier argued that the safeguard measures by India during 2015 to 2018 have breached the global trade agreement.
The World Trade Organisation (WTO) has discovered that India’s safeguard measure on the import of certain steel products didn’t fall in line in with some provision of General Agreement on Tariffs and Trade (GATT) 1994 and the Agreement in Safeguard.

The panel set up by WTO after India-Japan failed to resolve the issue suggested that India must take some action to correct the potential tariffs which will be retroactively imposed on imported steel.

The dispute arose when Japan lodged a complaint against India for imposing safeguard which is an emergency tariff that can be used by WTO members when they feel that a surge in import is hampering the industry.

With a view to protect domestic steel producers, India imposed the safeguard duty of 20% on the import of some products of steel in September 2015. Apparently, the duty was later brought down to 10% in March 2018.

The WTO panel pointed out that the inconsistency in the import duties levied from September 2015 to March 2018 breaches several core provisions of WTO’s Agreement on Safeguards (SG Agreement)

WTO members are given the right to levy safeguard duties to contain the unpredictable increase in imports which in turn is going to weaken the trends of domestic industries. But, the country considering to use the emergency tariff must first present evidence of damages caused by import hike on domestic industries. Secondly, the country must follow the global trade norms.

Japan which is the second largest producer of steel across the world had easy access to Indian steel market because of comprehensive free-trade agreement between Japan and India in 2011. As of now, the bilateral trade between the two countries stood was beneficial to Japan given the trade deficit amounted to $11 billion in fiscal 2017-2018.