India Wins at WTO Over US Anti Subsidy Action on HR Coils

A WTO panel granted a victory to India in its dispute with the US over countervailing duties that Washington had imposed on HR Coils.

At issue in the complaint (DS436) were certain provisions of the United States Tariff Act of 1930, and how these were applied in countervailing duty investigations on hot rolled carbon steel flat products from India. New Delhi had first filed the challenge in April 2012.

Back in 2004, the US Commerce Department had determined in an administrative review that the India National Mineral Development Corporation (NMDC) the country’s largest producer of iron ore – had provided high-grade iron ore at throw away rates to Indian Steel Industry.

According to the panel, the US did not have sufficient evidence to make the determination that a captive coal mining lease granted to Tata Steel under these programmes constituted a financial contribution – another violation of WTO subsidy rules.

This, in effect, constituted a specific subsidy, the US agency said, as those companies that received the iron ore were limited in number.

However, in determining whether a subsidy is, in fact, specific, the SCM Agreement says that one should take into account how diversified the relevant economy is and how long the programme at issue has been in operation.

Referring to prior proceedings in which the United States imposed trade remedies on imports from India, Washington tried to demonstrate that its Commerce Department did indeed consider India’s economic diversification.

In its ruling, the panel found that this reference was not enough to support the US’ argument, finding that Washington failed to account for all mandatory factors in determining that this subsidy was indeed specific to the steel industry.

Price benchmarks

To be considered as subsidy under the SCM Agreement, the government measures at issue should confer a benefit to the recipient.

The panel found that the US acted inconsistently with WTO rules by failing to consider the relevant domestic price information for use as in-country benchmarks.

Injury from six is not same as injury from one

In addition, India also challenged a rule that requires the US International Trade Commission – another agency involved in US trade remedy investigations – to cumulatively assess, for purposes of determining material injury, the effects of dumped and subsidised imports on the domestic industry under certain conditions.

In its injury assessment in the original CVD investigations, the USITC had lumped together the effects of subsidised imports from India with those of similar imports from ten other countries. Four of these countries – Argentina, Indonesia, South Africa, and Thailand – faced CVD investigations at the same time as India, as well as parallel anti-dumping probes. The other six were only subject to anti-dumping investigations.

The panel considered that the US rule – as it was applied in the original Commerce investigation – is inconsistent with several paragraphs of Article 15 of the SCM Agreement. Article 15.3 only allows the effects of imports subjected to simultaneous CVD investigations to be assessed jointly for the purposes of completing an injury analysis, the panel said.

One of the major Ruling in favour of India is that the Panel has held that the US law mandating cumulation of non-subsidized imports with subsidized imports while determining injury in a CVD investigation is inconsistent with WTO obligations. This Ruling potentially questions the validity of a number of other CVD proceedings conducted by the United States on products of Indian origin. The government is undertaking an evaluation all other products of Indian origin on which the US has applied the same provision to arrive at CVD. This provision has been in existence in the US for many years and India is the first country to successfully challenge this provision.

Moreover, the panel said, the use of the term “subsidised imports” in various articles of the SCM Agreement limits the scope of the investigating authority’s injury assessment only to subsidised imports – meaning that the effects of other “unfairly traded” imports that are not subsidised are not a relevant consideration.

The panel did not rule on all of India’s claims, as it deemed some as not being necessary to resolve the complaint – known in legal jargon as “judicial economy” – while rejecting the other remaining allegations.

India said on Tuesday, 15 July it may appeal against parts of a World Trade Organization ruling against countervailing U.S. duties on some of its steel exports, despite being partly vindicated in a trade dispute.

States impose countervailing duties, or punitively high import tariffs, when they suspect another country of gaining an unfair trade advantage through subsidies.

“Important issues have been in our favour but there are still some issues on which we are not happy,” India Commerce Secretary Rajeev Kher told reporters. “There are several procedural issues which are in U.S. favour.”