The WTO has set up a panel to resolve the dispute between Japan and India over imposition of safeguard import duty on iron and steel products.

As both the sides failed to resolve the issue in the bilateral consultation process, Japan had sought formation of dispute resolution panel.

“The dispute settlement body of the WTO has agreed to establish the panel,” an official said.

Japan in December dragged India to the WTO against certain measures taken by New Delhi on imports of iron and steel products.

Japan, which is the second largest steel producer in the world, had alleged that duties imposed on steel imports by India violates WTO trade norms.

In September 2015, India imposed provisional safeguard duty of 20 per cent on import of certain categories of steel with a view to protect domestic producers. Later in November last year, the government slapped the final duty.

The dispute assumes significance as India and Japan implemented a comprehensive free trade agreement in 2011.

It gave easy access to Japan in the Indian steel market.

Indian industry has time and again demanded to take out the steel sector from the pact. But it can happen only after both the sides agree to do the same.

The bilateral trade between the countries stood at USD 14.51 billion in 2015—16. Trade is highly in favour of Japan.

After the Japan’s first request for the panel was blocked by India at a meeting March 21, Japan has submitted its second request for a panel to determine whether India’s decision to impose a safeguard measure on imports of iron and steel products violate WTO rules.

India in its reply had stated that it was disappointed as Japan was insisting on the panel despite its sincere efforts to resolve the matter in consultations.

India has said that the measures in question were completely consistent with WTO rules and justified by special circumstances.