Huge relief for India’s steel industry.
By Kevin Manuel
WASHINGTON, DC: The World Trade Organization has ruled against the United States on an April 2012 complaint by China and India that the U.S. imposes hefty duties on products from the two Asian countries.
Washington has long argued, in an attempt to justify duties levied on products from the two nations, that both China and India subsidize a number of goods slated by the nations for export, which goes against WTO policy. This in turn presents what the U.S. calls unfair competition for domestic corporations.
China and India will both celebrate the victory that states that the U.S. will have to change the way it levies duties on Chinese steel and solar panels among other goods; and Indian steel.
The WTO judgment stated that the U.S. wrongly claimed that Indian subsidy programs had benefited some of its main steel companies, Tata Steel, Jindal Steel, and Power and Steel Authority of India, to name a few, and given them an unfair advantage.
In a statement to journalists, Indian Commerce Secretary Rajeev Kher told reporters, “important issues have been in our favor but there are still some issues on which we are not happy. There are several procedural issues which are still in U.S. favor.”
This is a major victory for India because steel exports have become a major part of its steel profits, with demand waning domestically. India’s steel companies have turned their eyes on foreign markets and much of their fiscal planning is based on export profits.
The $7.2 billion Chinese case covered more than just steel, but also the export of the solar panels. The raw materials for solar panels are plentiful in China, which allow them to manufacture them at a lower cost. While the U.S. accuses China of subsidizing these exporting firms, it has also executed duties as a countervailing measure to protect its domestic companies.
The WTO found that there was insufficient evidence to justify U.S. countervailing measures and also questioned the calculations that the U.S. had used to value subsidies China had allegedly given to domestic producers of items such as kitchen shelving, grass cutter, and citric acid.
A statement from China’s Ministry of Commerce welcomed the ruling.
“China urges the United States to respect the W.T.O. rulings and correct its wrongdoings of abusively using trade remedy measures, and to ensure an environment of fair competition for Chinese enterprises,” a statement from China’s trade mission in Geneva, said.
The U.S. is now deciding its next move. U.S. Trade Representative Michael Froman stated, “With respect to the other findings in the panel report, the Administration is carefully evaluating its options, and will take all appropriate steps to ensure that U.S. remedies against unfair subsidies remain strong and effective.”
While the rulings were not a clear cut victory for either China or India, the odds are stacked against the U.S., which must now decide whether an appeal is in order. This will be a challenge for the U.S. to justify its duties on foreign imports by proving that China and India subsidize their exports while both nations refute such accusations.