India proposes retaliatory duties on EU's safeguard measures on some steel products

New Delhi: India has proposed the imposition of retaliatory customs duties, under the WTO norms, on certain value of goods imported from the EU, as the two sides have failed to reach a consensus on the European Union's safeguard measures on some steel products.

In a communication to the World Trade Organisation (WTO), India said that it has proposed suspension of concessions will take the form of an increase in tariffs on selected products originating in the EU.

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"India hereby informs that from 2018 to 2023, the safeguard measures (of the EU) have resulted in cumulative trade loss for India to the tune of USD 4.412 billion on which the duty collection would be USD 1.103 billion.

"Accordingly, India's proposed suspension of concessions would result in an equivalent amount of duty collected from products originating in the EU," the communication said.

It added that to ensure the effective exercise of its right to suspend substantially equivalent concessions, India reserves its right to effectuate the proposed suspension immediately and adjust the products as well as the tariff (or customs duties) rates.

India will inform both the Council for Trade in Goods and the Committee on Safeguards on the next appropriate steps.

"India hereby notifies the Council for Trade in Goods of its decision to suspend concessions or other obligations under the General Agreement on Tariffs and Trade 1994 (GATT 1994) and the Agreement on Safeguards, that are substantially equivalent to the amount of trade affected by the measures imposed by the EU," it said.

The development assumes significance as the EU has extended safeguard duties on imports of certain steel product categories with an out-of-quota duty of 25 per cent, by another two years till 2026.

This is the second extension of the safeguards that take the form of the Tariff Rate Quota (TRQ), first imposed in 2018. It was later extended till June 2024 and now extended till June 2026.

The EU has notified the WTO of its proposal to extend safeguard measures on imports of certain steel products on May 29, 2024.

India is one of the countries affected by this measure as it has a substantial interest in steel exports to the EU.

In 2023-24, India's iron and steel and their products exports to the EU increased to USD 6.64 billion from USD 6.1 billion in 2022-23.

India, along with other countries, has earlier raised concerns at the World Trade Organisation (WTO) over the European Union's (EU) move to extend safeguard duty on the import of certain steel products till 2026.

New Delhi has also submitted its concerns to the EU regarding the manner in which safeguard measures have been extended and is violative of the global trade provisions and the WTO's Agreement on Safeguards.

Explaining the issue, an official said India has substantial interest as an exporter of the products concerned and the EU's measure is inconsistent with global trade rules.

India and the EU officials held bilateral consultations on the issue earlier, but both sides have not been able to reach a consensus on the matter.

The EU's move follows the US decision to impose additional duties on steel imports during the Trump administration.

As per the WTO rules, if no agreement is reached on the compensation within 30 days of the consultations, India reserves its right to suspend concessions or other obligations substantially equivalent to the adverse effects of the measures under the WTO's Agreement on Safeguards on the EU's trade, and any other right available under GATT 1994 and Agreement on Safeguards.

In 2019, India sought consultations with the European Union under the aegis of the WTO against a move of the 28-nation bloc to impose safeguard duties on certain steel products. The country had sought these consultations under the WTO's Agreement on Safeguards.

Against the US move to impose high customs duties on certain steel and aluminium products, the EU, in July 2018, proposed the imposition of definitive safeguard duties to protect their industry against a surge of imports.

India is concerned about the European Union's move as it exports nearly 6 per cent of its steel output to Italy. Italy is a member of the EU.

In a similar issue, India, in 2022, proposed additional customs duties of 15 per cent on the import of 22 products, including whisky, cheese and diesel engine parts, from the UK in retaliation to Britain's decision to impose restrictions on steel products.

The WTO is a Geneva-based, 164-member global body which frames rules and norms for exports and imports and adjudicates trade disputes among member countries.

India is negotiating a free trade agreement with the EU to boost trade and investment ties.

India's exports to the EU rose by 1.5 percent to USD 76 billion in 2023-24, while imports dipped by about 3 percent to USD 59.38 billion in 2023-24.

Commenting on the issue, think tank GTRI said that India's steel industry is already struggling with cheap imports from China and is facing challenges in meeting the requirements of the EU's Carbon Border Adjustment Mechanism (CBAM), set to take effect in January 2026.

"The EU's safeguard measures, which have been in place since 2018 have drastically reduced India's export volumes to the EU, causing significant financial losses," the Global Trade Research Initiative (GTRI) said.

The EU's safeguard measures are designed to protect its domestic steel industry from an oversupply of cheaper imports. These measures apply to 26 categories of steel products, including non-alloy and alloy hot-rolled sheets, cold-rolled sheets, metallic coated sheets, organic coated sheets, and other key steel products.

"India is facing a surge in steel imports from countries like China, Vietnam, and Indonesia, which have flooded the Indian market with low-cost steel," GTRI Founder Ajay Srivastav said.

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