WTO supports Japan on protective duties on India's steel imports

The Dispute Panel of the World Trade Organization (WTO) has largely supported Japan's complaint about the guarantee duty imposed by India on steel imports over two and a half years, the ruling said Tuesday.

The decision, which can be appealed by both sides, says India has violated WTO rules and urged India to take corrective action, although the controversial commitments ended in March this year.
Japan went to the WTO in 2016 to complain about an emergency tariff that WTO members can use to protect their businesses from the threat of sudden and disruptive growth in imports. India set the duty at 20 percent in the first year, narrowing to 10 percent in the past six months.

"The group's ruling emphasizes that security responsibilities should not exist if they do not comply with WTO rules," said Keiji Hattori, director of the trade policy bureau of the Ministry of Economy, Trade and Industry of Japan.

“This case will set a precedent for other similar cases,” he said. A spokeswoman for India's Ministry of Industry did not immediately comment.

The use of guarantees is subject to strict criteria, and the group stated that the reasons for India did not meet the required standard or show an increase in steel imports based on objective evidence.

However, India appears to be open to the WTO challenge as it could simply raise its normal tariff on iron and steel products and stay within the rules.

The annual value of Japan's exports of hot rolled coils used in automobile manufacturing, construction and industrial machinery to India in 2014 reached USD 502 million. But that figure fell after India imposed duties on some hot rolled steel in September 2015.

The WTO panel ruling must be adopted within 60 days if neither side makes an appeal.

Japan, the world's second-largest steel producer, usually tries to deal with trade disputes in bilateral negotiations, but with increasing global trade friction, Japan's defense against an industry that sells nearly half of its production overseas has become more proactive.