Events and Updates

Title: India ups ante on steel row after US fails to resolve concerns on duties

Posted on: 9th April 2018

Geneva: India has upped the ante on the steel dispute with the US at the World Trade Organization (WTO) after Washington failed to resolve New Delhi’s “concerns” about the non-implementation of the appellate body’s ruling against countervailing duties imposed by the US on Indian hot-rolled carbon products.

Just at a time when the US has resorted to unilateral and allegedly illegal measures by imposing additional duties of 25% on steel and 10% on aluminium under national security considerations, India has decided to press ahead with its unresolved steel dispute with Washington.

In a request filed with the chairperson of WTO’s dispute settlement body on 29 March, India said it held consultations with the US on 13 July and 4 October last year to resolve New Delhi’s concerns arising from the non-implementation of rulings issued by the appellate body against the US’ countervailing duties on Indian hot-rolled carbon products.

India said it “considers US’ failure to amend 19 USC § 1677(7)(G)(iii) is inconsistent with the DSB (dispute settlement body) recommendations in this dispute as well as Articles 15.1, 15.2, 15.3, 15.4 and 15.5 of the SCM agreement because the provision continues to require the US International Trade Commission (”USITC”) to cumulate the effects of subsidized imports with the effects of dumped, non-subsidized imports.”

The US also failed to implement several other findings issued by the appellate body against its determination of countervailing duties on Indian hot-rolled carbon steel products in which Washington “erroneously concluded that National Minerals Development Corp. (NMDC) is a public body.”

As a follow-up to consultations with the US that failed to resolve India’s concerns, New Delhi has now called for establishing a compliance panel under Article 21.5 of the dispute settlement understanding to determine whether the US implemented all the recommendations made by the dispute settlement body.

India’s request for the compliance panel will come up on Monday (9 April). In all probability, the US could block it. But Washington will not be able to prevent the establishment of the panel if India presses ahead with a second request.

In 2014, WTO’s highest adjudicative body—the Appellate Body—ruled against the US commerce department’s determination of “public body” in the dispute raised by India against the American countervailing duties on Indian hot-rolled carbon steel flat products.

“The US considers entities owned by the government (such as NMDC) to be a public body, but the appellate body has found that the entity must have a government function,” Brenden McGivern, partner in global law firm White and Case LLP, had said in an interview last year.

Consequently, the US is required to either amend or repeal that particular determination of public body—19 USC 1677(7)(G)(iii) in its domestic law—as per the appellate body’s ruling. The US is also required to file a status report at WTO’s dispute settlement body (DSB) meeting, which takes place almost every month on whether it has implemented the DSB recommendation.

The US has chosen not to provide any status report on its efforts to repeal or amend the controversial provision, India pointed out at a DSB meeting.

While the US continues to submit status reports on other major disputes—such as the US’s anti-dumping measures on certain hot-rolled steel products from Japan, its copyright provisions of Section 110(5), which pertain to working on statutory amendments to domestic laws that have been found to be inconsistent with its WTO obligations—Washington has not furnished any status report on the dispute with India.

“This is not a minor procedural issue but a serious systemic issue for the dispute settlement mechanism,” India had warned on several times, arguing that “ignoring this aspect would render Article 21.6 ineffective and seriously undermine the surveillance mechanism under the DSU (dispute settlement understanding)”.

The US, on its part, had maintained that it has not utilized the WTO-inconsistent domestic law in any probe concerning subsidies and countervailing duties. India disagreed with the US assessment, and pointed out that the issue of non-utilization of a provision of a law is irrelevant in the context of implementation of dispute settlement body recommendations.