The United States has lodged a complaint with the World Trade Organisation (WTO) against India regarding “retaliatory duties” that were imposed by the latter on 28 US goods in June 2019. This retaliatory move came as a response to US’s imposition of unilateral additional tariffs on steel and aluminium imported from India.
The Dispute Over Additional Duties
The crux of the dispute lies in the additional duties that India decided to impose on certain American import goods. The US argues that these duties are inconsistent with the provisions of the WTO’s General Agreement on Tariffs and Trade. India, however, counters this argument by stating that such retaliatory measures are allowed under the WTO’s Agreement on Safeguards.
This disagreement stems from the distinctly different interpretations of the WTO’s rules by both nations, which has resulted in the current trade standoff. The US maintains that its tariffs are not a safeguard measure, but were enacted under Section 232 of the US Trade Expansion Act of 1962 on grounds of national security.
The Outcome of Unsuccessful Dispute Consultations
In case the dispute consultations fail to bring forth a resolution, the US has the right to request the WTO to set up a panel that can effectively decide on the matter. If this happens, the decision of the panel will be binding and might have significant implications on the bilateral trade relationship between the two countries.
The Origin of the Mini-Tariff War
This mini-tariff war roots back to the USA’s decision to withdraw the Generalized System of Preferences (GSP) status from India, amongst other economic issues. The GSP is a program designed to promote economic growth in developing nations by providing preferential duty-free treatment for goods from these countries.
| Date | Action |
|---|---|
| June, 2019 | India imposes retaliatory duties on 28 US goods |
| Date Unknown | US imposes unilateral additional tariffs on steel and aluminium imported from India |
| Date Unknown | US withdraws GSP status from India |
Previous Instances of Trade Disputes between the US and India
This is hardly the first instance where the USA and India have had to resort to the WTO for the resolution of their trade disputes. Notably, in a past case, India claimed a major victory against the USA at the WTO concerning domestic content requirements and subsidies. The recurrence of such trade disputes underlines the complexities involved in the global trade system and the pivotal role played by international organizations like the WTO in resolving them.