India challenges US over steel duties

Posted on April 12, 2012

India has launched a trade dispute against the US at the World Trade Organisation over duties on its steel products, escalating trade tensions between the two countries.The move marks the latest chapter in an outbreak of litigiousness pitting India and the US against each other at the global trade body – which could raise concerns about a souring of their economic relations.

As well as the fresh case on steel duties unveiled on Thursday, India is dragging the US before the WTO to challenge America’s rules on work visas, which it believes to be excessively costly and discriminatory. Meanwhile, last month the Obama administration brought its first case against India at the WTO, challenging the Asian nation’s ban on US poultry.

“These things end up poisoning the larger relationship,” said Bill Reinsch, president of the National Foreign Trade Council in Washington. “It’s worrisome and it’s getting worse.”

Mr Reinsch said that even before the latest tit-for-tat spat at the WTO, US companies were alarmed by the prospect of the Indian government retroactively taxing mergers between international groups and their Indian subsidiaries in the wake of Vodafone’s tax dispute with India.

The WTO gave no details on the steel duties case filed on Thursday but said that India had “requested consultations” with the US – the first stage of a formal trade dispute.

“I can confirm that we received a request for WTO consultations from India today regarding countervailing duties on certain steel products,” said a spokeswoman for the US trade representative. “We are currently reviewing the request, and will respond to it in due course,” she said.

In late March, the US commerce department had slapped duties of 286 per cent on some steel pipes imported from India, judging that the products had been unfairly subsidised. The US government had been petitioned to make that decision by a coalition of American companies including Allied Tube and US Steel.

The flare-up of trade disputes between the US and India seems a far cry from the better mood between the two when Barack Obama, US president, visited India in Novemeber 2010, signing off on billions of dollars worth of trade deals for US companies.

Last month, John Bryson, the commerce secretary, was in India, assuring at the conclusion of his trade mission that “concrete steps” had been taken to strengthen the commercial relationship.

“American business leaders connected with Indian firms to create new opportunities in India’s rising infrastructure and renewable energy sectors. We met with government and business leaders and laid out our goals, as well as our concerns,” Mr Bryson said.

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