India, US agree to engage in talks to settle dispute over steel import duty

Amiti Sen New Delhi | Updated on January 24, 2020

This would effectively mean that Washington can continue to impose countervailing duties on Indian steel for long

With the World Trade Organization’s Appellate Body not functioning, India and the US have agreed to engage in discussions in “good faith’’ to sort out the dispute over countervailing duties imposed by Washington on certain Indian steel products.

“Agreeing to mutually sort out issues against which appeals are pending with the Appellate Body is the most logical way out given the fact that no one knows when the present crisis would be resolved. However, what is to be seen is whether the US would show a similar accommodating attitude when a ruling that is in its favour has been appealed against,” a Delhi-based trade expert told BusinessLine.

Companies affected

The companies affected by US countervailing duties include Essar Steel, Ispat Industries Ltd, Steel Authority of India Ltd (SAIL), Tata Steel and JSW Steel.

Last month, the US had appealed against a WTO compliance panel ruling which directed it to bring its measures against Indian hot-rolled steel flat products in compliance with multilateral trade rules, but it couldn’t be taken up by the Appellate Body. This is because it stopped functioning as the US had blocked the appointment of new judges demanding that reforms in the body’s functioning should be brought about first.

“The parties (India and the US) continue to engage in good faith discussions to seek a positive solution to this dispute…..The parties understand that the US will submit a notice of appeal and an appellant submission once a Appellate Body division can be established and that India may file its own appeal on alleged errors in issues of law covered in the panel report and legal interpretations developed by the panel at that point of time,” as per a joint submission by India and the US to the Dispute Settlement Body of the WTO.

Compliance panel report

What is of greater importance is the fact that the two countries have also agreed that request for adoption of the compliance panel report will be made only after the Appellate Body Division is established to hear and complete any appeal in this matter.

“The decision taken by the US and India not to insist on adoption of compliance panel report till the issue gets heard at the Appellate Body effectively means that the US will not have to change for a very long time its countervailing measures that were found to be against WTO rules by the compliance panel. So, it can continue levying countervailing duties on Indian steel till the Appellate Body is back in business which doesn’t seem to be likely soon,” a government official said.

Published on January 24, 2020

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