A World Trade Organization (WTO) dispute panel largely upheld Japan’s complaint against a safeguard duty imposed by India on steel imports for two-and-a-half years, a ruling published on Tuesday (6) showed.
The ruling, which can be appealed by either side, said India had broken the WTO rules and urged India to take corrective action, even though the disputed duties ended in March this year. The corrective action is for potential duties retroactively to be put on imported steel.
Japan went to the WTO in 2016 to complain about the safeguard – an emergency tariff that WTO members can use to shield their industries against the threat of a sudden and damaging surge in imports. India set the duty at 20 per cent in the first year, tapering to 10 per cent in the final six months.
“The panel’s ruling underlines that safeguard duties should not be easily imposed unless they are consistent with the WTO rules,” Keiji Hattori, director at trade policy bureau at Japan’s Ministry of Economy, Trade and Industry said.
“This case will be a precedent for other similar cases,” he said.
A spokeswoman for India’s steel ministry was not immediately reachable for comment.
Use of safeguards are subject to strict criteria, and the panel said India’s reasons did not reach the required standard, or show a rise in steel imports based on objective data.
However, India appeared to have opened itself up to a WTO challenge, since it could have simply raised its regular tariff on the iron and steel products and stayed within the rules.
The annual value of Japan’s export of hot-rolled coils, used in automobiles, construction and industrial machinery, to India came to $502 million in 2014. But the figure plunged after India imposed the duties on some hot-rolled flat steel products in September 2015.
The WTO panel’s ruling should be adopted within 60 days, unless either of the parties appeals.
Japan, the world’s second-biggest steel producer, usually tries to deal with trade disputes through bilateral talks, but with global trade friction increasing, Japan’s defence of an industry that sells nearly half of its products overseas has become more vigorous.