India decides to retaliate against EU’s steel tariffs citing $ 4bn loss
After goods exports in August shrunk by 9 per cent, India on Thursday notified the World Trade Organisation (WTO) that it has decided to retaliate against the European Union’s steel tariffs, which have resulted in a trade loss of $4.41 billion between 2018 and 2023, an official notification said.
While New Delhi did not inform the WTO of the exact nature of the retaliation, it stated that the proposed suspension of concessions will take the form of an “increase in tariffs” on selected products originating in the EU, and that it reserves the right to effectuate the proposed suspension immediately.
This comes after negotiations for a settlement held earlier this year failed to materialise, and as the European Union (EU) further extended safeguard duties on steel imports until 2026. The duties were first imposed in 2018 to discourage steel imports following the steel tariffs imposed under US President Donald Trump.
“India hereby informs that from 2018 to 2023, the safeguard measures have resulted in a cumulative trade loss for India to the tune of $4.412 billion, on which the duty collection would be $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 notification read.
“To ensure the effective exercise of its right to suspend substantially equivalent concessions or other obligations referred to in Article 8.2, India reserves its right to effectuate the proposed suspension immediately and adjust the products as well as the tariff rates. India will inform both the Council for Trade in Goods and the Committee on Safeguards on the next appropriate steps,” India told the WTO.
This trade skirmish between India and the EU comes barely a few months after both sides discussed closer trade ties at the India-European Union Trade and Technology Council (TTC) Ministerial Meeting. The TTC signalled closer trade relations between the two, as the EU previously had a TTC only with the US. Moreover, the high-level ministerial meeting was attended by as many as three Union ministers.
India’s retaliation follows the EU’s decision to extend safeguard duties on steel imports for the second time. The duty was expected to expire in June this year. The safeguard duty was in the form of a Tariff Rate Quota (TRQ), and with the latest extension, the safeguard will have been in place for eight years.
Under the TRQ mechanism, every country is allocated a quota for the export of 26 steel products to the EU. This quota was set at 105 per cent of the average imports from that country between 2015 and 2017. Any exports beyond this quota attract an additional 25 per cent duty. Notably, under WTO rules, another safeguard measure for these categories of steel products cannot be imposed for another eight years.
India’s decision comes days after the August export figures showed a sharp 10 per cent decline, which widened the goods trade gap to its highest in 10 months at $30 billion.
Official data revealed that petroleum product exports fell to $5.9 billion last month compared to $9.5 billion in August last year.
