New Delhi will point out that the quantum of duty raised is not WTO-compliant as it is way beyond its ‘bound rate’, which acts as ceiling on tariffs
India will take up with the US next week the Donald Trump-administration’s decision to impose steep import tariffs on aluminum and steel that could adversely affected Indian companies.
Indian officials will take up the matter with visiting US commerce department officials visiting New Delhi on April 9-10, to exclude Indian steel and aluminum products, among others, from tariff hikes.
“We will try to convince officials from the US to exempt India from the import duty hikes that the Trump government has imposed on steel and aluminum products last month,” a senior government official said.
In March, the US government signed an order imposing at least 24 percent tax on steel and 10 percent on aluminum products coming into the country from all nations, except Mexico, Canada, South Korea, European Union, Argentina and Brazil.
China, India and Russia will be affected by the tariff hike as the US did not grant these nations any exemption.
The move triggered a trade war of sorts globally, as China—the biggest producer and exporter of steel—retaliated by imposing similar tariffs on exports to the US.
India, however, will not retaliate the way China did or drag the issue to the World Trade Organisation (WTO)—the global apex body for settling trade disputes—as the US is an important ‘strategic partner’ for the country, the official explained.
However, it is learnt that India will point out that the quantum of duty raised is not WTO-compliant as it is way beyond its ‘bound rate’, which act as ceiling on tariffs.
Another concern for the government towards the tax hike on imports is that India has a trade surplus with the US.
According to a report published by Care Ratings, in terms of value, imports from the US into India is around 50 percent of the exports from India to the US. The trade surplus stood at around USD 20 billion in 2017-18.
The world’s largest importer of steel, US slapped higher duty on the alloy as it intends to increase its domestic steel production from its current 73 percent of capacity to approximately an 80 percent operating rate, the minimum rate required for long-term sustainability, as per the estimation of US department of commerce.
The direct impact of the move on India is limited as most products exported to the US attract anti-dumping or countervailing duties. Aluminum and steel together accounts for around 3 percent of India’s exports to the US and in 2017, India exported less than one mln tn of the alloy, primarily pipes, tubes, and wire rods, to the US.
However, the industry and the government fear a long-term impact of the executive order.
According to another government official, steps taken by the US can create glut in export-oriented nations like China, Russia, and South American nations that could be diverted towards India.
“Our concern is that India should not become a dumping ground for steel yet again,” the official said.