India may retaliate against the US in steel dispute at WTO

Nov 18,2019

India may retaliate against the US on the basis of issues that have been decided in India’s favor by the World Trade Organisation compliance panel in the dispute over countervailing duties on steel imports. This can happen in case Washington does not appeal the ruling, which it can do over the next 60 days.

“In the compliance panel report issued by the WTO on Friday, there are some unfavorable issues for India, but there are other important ones where the ruling is favorable. The Indian team is studying the report and is looking at the possibility of moving for retaliation,” an official familiar with the matter said.

However, India can ask WTO for retaliation only if the US does not appeal the ruling, he added. New Delhi is also examining if it should appeal against the rejection of some of its claims.

On Friday, a report was submitted by the WTO compliance panel set up to determine whether the US brought certain measures into compliance that were found to be inconsistent in its original dispute with India. The US’ reinvestigation on whether to apply countervailing duties on imports of certain hot-rolled carbon steel flat products from India, as well as a US legislative measure concerning assessments of injury to domestic firms was under the scanner.

“The most important ruling from India’s point of view is that the panel upheld its contention that the US acted inconsistently with Articles 15.1 and 15.5 by failing to consider the impact of dumped imports from China, Kazakhstan, Romania, Chinese Taipei, and Ukraine on the injury suffered by the domestic industry and to separate and distinguish it from the effects of subsidized imports and of other known factors,” the official said.

The observation on the calculation of injury suffered is important because while determining whether countervailing duties, which are penal duties to counter the impact of imports that got subsidies in the home country, it is not just enough to show that the product was subsidized. The importing country also has to prove that the subsidized import caused substantial injury to its domestic producers.

“We recommend that the US bring its measures into conformity with its obligations under the SCM Agreement and the GATT 1994,” the ruling stated.

In December 2014, the WTO had originally ruled against the US imposing countervailing duty on imports of certain Indian steel products.

“The fact that the US has not yet brought its measures into conformity with the SCM Agreement gives India a strong advantage in this case,” the official said.

In case an appeal is filed by any of the two countries, a final decision on the matter could get indefinitely delayed as the WTO’s Appellate Body is set to be dysfunctional from December 11. The US has been refusing to allow the appointment of new judges because of certain reforms it wants in the functioning of the apex decision-making body.

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