Trade tensions between Washington and New Delhi
ratcheted up another notch on 12 April, with India launching a WTO challenge
against US countervailing, or anti-subsidy, duties on imports of certain Indian
steel products (DS436). This complaint is the latest in a series of
commercial disagreements between the two trading partners.
The move comes after the US Commerce Department
imposed last month an initial anti-subsidy duty of nearly 286 percent on imports of circular welded carbon-quality steel
pipe from India. Those duties are expected to be finalised by the US Commerce
Department in August.
Countervailing duties are meant to combat imports
priced below market value because the producer receives undue support from its
government. While they are not illegal under WTO law, they are disciplined by
the Agreement on Subsidies and Countervailing Measures (SCM Agreement), which
provides that they may only be imposed if a country properly determines that
subsidised imports have injured domestic industry.
Acting on a petition from a coalition of US steel
companies, including Allied Tube and US Steel, the US Commerce Department
argues that India’s steel subsidy comes from its state-operated and industry
leading iron ore producer, the National Mineral Development Corporation (NMDC).
According to Commerce, NMDC is supplying steel pipe makers with ore that is far
below market prices, thus creating an implicit subsidy, the US coalition says.
The Office of the US Trade Representative (USTR)
has attributed the low price of raw materials for steel producers to Indian
export restrictions on iron ore since 2008.
“These restrictions reduce Indian exports of these
inputs, and may reduce supplies on international markets for raw materials used
in steel production,” said a 2010 USTR report on India. “The Indian government appears to be
using these measures to improve the availability and lower
prices of inputs used by India’s rapidly growing steel industry.”
If consultations between the two parties fail over
the coming sixty days, India may request a WTO panel to hear the case.
Sparring over poultry, visas
The countervailing duty complaint is one of several
trade spats involving New Delhi and Washington as of late.
Just last month, the US launched its own complaint
against India at the WTO regarding the latter’s ban on imports of US poultry
and other farm products (DS430). India has justified the five year ban as an
attempt to prevent avian influenza outbreaks in its country, but the US argues
that there is no scientific evidence to justify the measure.
Also lurking in the background is an expected WTO
complaint from India over US visa fees for skilled workers. Although an
official WTO dispute has not been launched, India has recently voiced its
displeasure with Washington’s visa regime, with government officials promising
to file a complaint in the coming days.
Specifically, New Delhi disagrees with 2010 US
legislation that nearly doubles visa application fees in order to finance US-Mexico
border security, claiming that the law disadvantages India’s services trade.
The current disputes between India and the US could
have broader implications for their trading relationship, observers
caution.