On April 3, 2017, the Dispute Settlement Body of World Trade Organisation (WTO) agreed to set up a panel for resolving a dispute pertaining to imposition of safeguard duty on imports of Japanese steel products by India
In March 2016, India imposed 20% provisional safeguard duty on import of hot-rolled steel coils from Japan. This action was taken with a view to protect domestic steel producers. Although the duty is being gradually tapered off, it will be in place till March 2018.
Japanese authorities allege that imposition of duties by India is in contravention of WTO norms. It mentioned that since production and sales of Indian steelmakers have not reduced, India’s action is not justified.
- In December 2016 it dragged India to the WTO on this matter. Japan requested WTO to set up a panel to determine if India’s decision to impose a safeguard duty violated WTO norms or not.
- However this request was blocked by India at a meeting held on March 21, 2017. Thereafter, again Japan requested WTO for a panel, which has now been acceded.
- Japanese authorities have reported that imposition of duties by India will cost its steel industry $220 million till March 2018. It is to be noted that, after China, Japan stands 2nd in steel production in the world.
Indian authorities have put forth an argument that imposition of duties were warranted by the prevailing circumstances and is consistent with WTO norms.
- Moreover India has expressed dissatisfaction over the decision to create panel despite of its sincere efforts to resolve the matter through bilateral consultations. India also added that giving special treatment to this matter by considering it as ‘urgent’ is not necessary.
- Amidst this controversy, an important aspect is the Comprehensive Free Trade Agreement, which was implemented between India and Japan in year 2011. Under this agreement, Japan is having an easy access to Indian steel market.
- Time and again, Indian steel industry players have demanded to remove the steel sector from this agreement. This can happen only if both, Indian and Japanese authorities agree to it. In year 2015-16, bilateral trade between India and Japan stood at USD 14.51 billion.
- Besides Japan, other 12 WTO member countries too have complaints against India’s imposition of safeguard duty. These countries have requested for third party rights in dispute and will thus have rights to comment and access to reports related to the dispute.
Quick Facts about Japan:
- Capital: Tokyo
- Currency: Japanese Yen
- Current Prime Minister: Shinzo Abe
About World Trade Organisation (WTO):
WTO is an international organisation which acts a regulator of international trade. The basis for regulation is the trade agreement signed between trading nations. It provides a platform for governments to negotiate trade agreements and settle trade disputes.
- Founded in: 1995
- Headquarters: Geneva, Switzerland
- Current Number of Member States: 164
- Director General: Robert Azevedo