India to check if US' move to hike duties on steel, aluminium follows global trade norms
, ET Bureau|
Mar 05, 2018, 07.42 AM IST
NEW DELHI: India has begun to legally examine the move by the United States to impose higher duties on steel and aluminium imports to check if countries are free to use domestic laws to raise taxes to secure their local industry.
The US’ threat of trade wars with countries to reduce its trade deficit has made India cautious as it anticipates a similar raise in duties on products it exports to Washington. “When a country (US) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win,” US President Donald Trump tweeted last week.
India will study if such a step is in accordance with norms of the World Trade Organization (WTO), a government official told ET. “We are examining from a legal perspective if countries are free to use domestic laws to raise taxes to secure their local industry and whether this is WTO compatible,” he added.
The US’ move comes days after the Department of Commerce’s Section 232 national security reviews of steel and aluminium, where it has recommended a tariff of at least 53% on all steel imports from 12 countries — Brazil, China, Costa Rica, Egypt, India, Malaysia, Russia, South Korea, South Africa, Thailand, Turkey and Vietnam. The countries identified are projected to account for less than 4% of US steel exports in 2017, the report said.
The US is targeting imports of solar panels, washing machines and steel, which, as per an official, will not adversely impact India as the country doesn’t export huge volumes of these products. “Though we will not be impacted much, similar types of taxes may come for us tomorrow,” the official aware of the details said. “We must protect our country and our workers. Our steel industry is in bad shape,” Trump said in a separate tweet.
In 2016-17, India exported articles of iron and steel worth $1.26 billion to the US and $960.58 million in the April-October period of 2017-18. In the same time span, iron and steel exports were $330.17 million and $207.89 million, respectively. The US’ applied tariffs on stainless steel rods and billets is 0% while on aluminium rods is 2.6%. Applied rates are those that governments actually charge on imports, which can be lower and have a direct impact on trade.
The duties are low and could allow elbow room to the US to raise tariffs, an industry expert said. India’s export of aluminium and articles thereof to the US in FY17 were $350.15 million and $285.46 million in the first seven months of FY18. “There’ll not be much impact on us. If there is an impact on China and Canada, it might actually benefit us but the move can be infectious. If it escalates and other countries start doing the same then world trade will get hit and that always impacts us,” said Ajay Sahai, director general, Federation of Indian Export Organisations.
A Delhi-based trade expert said if the US market closes, then Asian producers, seeing demand here, may dump their products here or create import surges.
The US’ threat of trade wars with countries to reduce its trade deficit has made India cautious as it anticipates a similar raise in duties on products it exports to Washington. “When a country (US) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win,” US President Donald Trump tweeted last week.
India will study if such a step is in accordance with norms of the World Trade Organization (WTO), a government official told ET. “We are examining from a legal perspective if countries are free to use domestic laws to raise taxes to secure their local industry and whether this is WTO compatible,” he added.
The US’ move comes days after the Department of Commerce’s Section 232 national security reviews of steel and aluminium, where it has recommended a tariff of at least 53% on all steel imports from 12 countries — Brazil, China, Costa Rica, Egypt, India, Malaysia, Russia, South Korea, South Africa, Thailand, Turkey and Vietnam. The countries identified are projected to account for less than 4% of US steel exports in 2017, the report said.
The US is targeting imports of solar panels, washing machines and steel, which, as per an official, will not adversely impact India as the country doesn’t export huge volumes of these products. “Though we will not be impacted much, similar types of taxes may come for us tomorrow,” the official aware of the details said. “We must protect our country and our workers. Our steel industry is in bad shape,” Trump said in a separate tweet.
In 2016-17, India exported articles of iron and steel worth $1.26 billion to the US and $960.58 million in the April-October period of 2017-18. In the same time span, iron and steel exports were $330.17 million and $207.89 million, respectively. The US’ applied tariffs on stainless steel rods and billets is 0% while on aluminium rods is 2.6%. Applied rates are those that governments actually charge on imports, which can be lower and have a direct impact on trade.
The duties are low and could allow elbow room to the US to raise tariffs, an industry expert said. India’s export of aluminium and articles thereof to the US in FY17 were $350.15 million and $285.46 million in the first seven months of FY18. “There’ll not be much impact on us. If there is an impact on China and Canada, it might actually benefit us but the move can be infectious. If it escalates and other countries start doing the same then world trade will get hit and that always impacts us,” said Ajay Sahai, director general, Federation of Indian Export Organisations.
A Delhi-based trade expert said if the US market closes, then Asian producers, seeing demand here, may dump their products here or create import surges.
