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India has said that safeguard measures adopted for its steel industry are temporary which will eventually be eased out and that New Delhi will explain this to Japan at the WTO consultations.
Japan has dragged India to the World Trade Organisation against safeguard or penal duties imposed on certain categories of steel.
“We have been stating in the meetings of the WTO safeguard committee that the safeguard duties imposed on steel were temporary and in response to a surge in imports that was hurting our domestic companies. The duties will taper off and be removed in due time once the domestic situation becomes comfortable,” said a Commerce Ministry official.
India will possibly use the same argument once it goes through Japan’s request and formal consultations begin on the issue, the official added.
Experts say that although India is on a safe wicket at the WTO as the duties are temporary, it could affect the imposition of similar duties in the future in case a dispute panel is constituted and it finds faults with the way in which the safeguard duties were calculated.
In March this year, India had extended safeguard duties — penal duties imposed over and above the regular customs duties to check import surges of identified items — on certain hot-rolled steel items till March 2018.
As per the Finance Ministry’s notification, safeguard duty will apply on hot-rolled flat products of non-alloy and other alloy steel in coils of 600 mm width. The safeguard duty will be 20 per cent minus any existing dumping duty till September 2016, following which it will be reduced to 18 per cent till March 2017, then brought down to 15 per cent till September 2017 and eventually to 10 per cent by March 2018.
Japan, which along with the EU, had complained against the safeguard measures several times at the WTO committee on safeguards stating that these were based on weak grounds, also protested against minimum import price on some other categories of steel items applicable till March 2017.
The Japanese government has estimated that the tariffs could cost Japanese steel companies about $220 million through March 2018, as per reports in the Japanese media.
“We need to see the details of the request for consultation. If this issue gets escalated further and a panel is constituted, it might look into whether the safeguard duties were imposed in accordance with the requirements of the agreement on safeguards,” said Abhijit Das from the Centre for WTO Studies.
After a sharp increase in steel imports last year, import of total finished steel declined by 37.3 per cent to 3.594 million tonnes in April-September 2016-17 compared to the same period of last year with restrictions imposed by the government paying off.
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