Asit Ranjan Mishra   

India had dragged the US to WTO over US to hold talks with India, others at WTO over tariffs Separately, the next round of India-US talks for a trade package are set to take place next week

25% steel tariff and 10% aluminium tariff imposed by President Trump

The US will engage in consultations with India and other countries at the World Trade Organization (WTO) on 20 July over the unilateral increase in steel and aluminium tariffs that has set off a global trade war.

India had dragged the US to the WTO over the 25% steel tariff and 10% aluminium tariff imposed by President Donald Trump on grounds of national security. The other countries that have raised the issue at the WTO include China, European Union, Canada, Switzerland, Russia, Norway and Mexico.

India has, in retaliation to the tariff hikes by the US, announced that it will from 4 August target 29 US products worth $10.6 billion, including almonds, apples and phosphoric acid. India did not impose the tariffs immediately as the two countries were engaged in bilateral negotiations to finalize a trade package to douse tensions. The next round of negotiations for the trade package is scheduled to take place on Monday and Tuesday in the US.

“While the US is likely to use national security concerns to justify the action, India and other countries would like a dispute settlement panel of WTO to rule on the matter,” a commerce ministry official said on condition of anonymity.

India, the six other countries, and the EU have argued that the tariff hikes by the US need to be treated as safeguard duties that give them the right to retaliate.

However, in a communication to Russia agreeing to consultation at the WTO, the US argued that the tariffs imposed pursuant to Section 232 are issues of national security and not susceptible to review by WTO dispute settlement, and that the consultations provision in the agreement on safeguards is not applicable.

“Every member of the WTO retains the authority to determine for itself those matters that it considers necessary to the protection of its essential security interests,” it said. However, the US accepts the request to enter into consultations, it said.

Trump has often pointed to the bilateral trade surplus India enjoys, claiming that it prohibits US exports through higher tariffs. He has often raised the issue of higher tariffs imposed by India on Harley-Davidson motorcycles and has threatened to slap reciprocal taxes on Indian bikes. The US has challenged almost all of India’s export subsidies at WTO. It is also reviewing the generalized system of preferences programme, under which India exports goods worth $5.6 billion to the US at preferential rates.

Trade ties between India and the US have deteriorated during the Trump administration. However, trade terms had been tense even when the relationship between the two countries was at an all-time high. During Barack Obama’s tenure, the US had dragged India to the WTO over its ban on US poultry imports and subsidies for domestic solar panel makers. India lost both cases. India has taken the US to the WTO over allegations of trade-restrictive measures.

Trump’s key target in his war against unfair trade though is China. Both the US and China last week imposed tariffs on each other on imports worth $34 billion.

asit.m@livemint.com NEW DELHI

Courtesy: Mint: 12 Jul 2018