Commerce ministry mulls wto action against trump’s steel tariffs – the wire chicken machine

New delhi: even as india eases hurdles to key american exports to keep US president donald trump in good humour and stave off retaliatory measures, it is considering challenging america’s duty hikes on aluminium and steel products at the world trade organisation (WTO), in a development that has left many puzzled.

While india’s aluminium and steel exports to the US are not significant, the government is still considering challenging US duty hikes at the WTO.

Sources said the commerce ministry has internally held discussions on the issue. But, for now there are two opposing views within the ministry. While one section is in favour of direct action against the US at the WTO, the other section wants the government to wait and watch – if for instance, some of india’s close trading partners move the world trade body, the modi government could then join in.

The US has recently challenged india’s export subsidy regime at the WTO.Import chicken there are fears that the US could bring more lawsuits against india at the multilateral trade body if the latter challenges its aluminium and steel duty hikes, say trade experts.

Anwarul hoda, former WTO deputy director general and currently chair professor of indian council for research on international economic relations (ICRIER) trade policy and WTO research programme, said it does not make sense for india to go to the WTO dispute settlement against the US import duty hikes.

Experts are also baffled by prime minister narendra modi’s penchant for granting trade concessions to to important allies without keeping bureaucrats and domain experts in the loop. That not only kills the possibility of any trade-off but also leaves little room for deniability, say experts.

India had surplus of nearly $23 billion in merchandise trade with the US in 2017. At a time when the US is seeking full reciprocity from its trading partners, it is unclear how the modi government’s stance of pre-empting US anger with incremental trade concessions will work.Duty hikes

For example, modi recently ordered to reduce import duty on harley davidson bikes from 70% to 50% after talks with the US president. However, the latter remained unimpressed.

“now, the prime minister (narendra modi), who I think is a fantastic man, called me the other day and said we are lowering it to 50%. I said okay, but so far we’re getting nothing. So we get nothing. He gets 50%, and they think we’re doing – like they’re doing us a favour. That’s not a favour,” trump said.

Trump added the US wants fair and reciprocal trade deals. “when they (harley davidson) send a motorcycle to india, as an example, they have to pay 100% tax – 100%,” trump said in his remarks to a recent gathering of governors of all the states at the white house.

This was the second time he expressed dissatisfaction at india’s import duty on high-end bikes. Earlier, he had called it “unfair” and threatened to increase the tariff on import of indian motorcycles to the US.Duty hikes

If america wants, it can retaliate against india without any fear of counter retaliation. That underscores the importance of WTO for india, said trade experts.

Meanwhile, india seems to be relenting on its earlier stand on not allowing import of chicken legs from the US. Commerce minister suresh prabhu has said import of chicken legs from the US won’t adversely affect the domestic poultry industry.

“the import of US poultry products has not found any favour in the indian market. It is unlikely to undermine the domestic market. These are frozen products which are likely to reach a small segment of the domestic marketplace and this may not be more than 5%. We in the commerce ministry are committed to ensure fair trade which creates win-win for our local industry,” prabhu said.

“cheaper american chicken legs will definitely hit the local business by 25%.This will not only affect poultry but also maize and soybean growers as almost 40% of maize and soybean is used as feed by the industry, vasant kumar shetty, convenor of the all india broiler coordination committee, said.Duty hikes

He said the production cost of the US poultry industry was much lower because of genetically modified (GM) maize and soybean. Shetty said that while the government was allowing import of US chicken legs, it was not promoting the export of boneless chicken from india, which have a high demand in the US.