Japan Gets WTO Panel for Fast Track Action in Steel Safeguard Case

· India Attempts to Drag the Case Fails as 12 Others Join in as Third Parties

· Early time Frame Accepted as Safeguard Action Expires in Mar 2018, Japan Fears Loss $220mn by Then

The dispute settlement body of the WTO, on Monday, agreed to Japan’s request for setting up a dispute settlement panel to determine whether India’s decision to impose a provisional and then definitive safeguard measure on imports of iron and steel products violate WTO rules. On March 21, India blocked the first request for panel.

India imposed safeguard duties-penal duties to protect vulnerable domestic industry against a surge in imports - on hot-rolled steel products in March 2016 fixed at 20 per cent which is being slowly tapered off but would be in place till March 2018. The safeguard duty is global, that is, it is on imports all countries in the world even though the alleged offender is Japan.

India plea to block time frame on Japan’s request to the World Trade Organisation (WTO) to put in place early time frames for a “prompt’’ resolution of its dispute against India’s penal duties on steel imports.

New Delhi has argued that there is no rationale for treating this dispute any more urgently than other WTO disputes it was involved in and the same standard should be applied to all disputes.

It generally takes around 18-20 months for settling a dispute at the WTO.

Japan had asked for urgent action since the measure will expire on March 13, 2018, it asked for a prompt resolution of the dispute. Japanese government has reportedly estimated that the tariffs could cost Japanese steel companies about $220 million through March 2018.

India said it explained to Japan that the measures in question were wholly consistent with WTO rules and justified by special circumstances. It added that there was no justification to give special treatment to this case.

As many as 12 members including the US, Australia, Canada, the European Union, Korea, Kazakhstan and Vietnam have submitted requests to have third party rights in the dispute.

These countries will have access to reports submitted by both parties in the dispute and also allows them to give comments.

Japan is the second largest steel producer in the world.

India and Japan have implemented a comprehensive free trade agreement in 2011 to give easy access to Japan in the Indian steel market. (The FTA Database at ABS shows that practically the entire steel sector as listed in Chapters 72 and 73 of the Customs Tariff is zero duty in the Japan case. A few sensitive items are excluded but these too pegged at a low 3.6%).

Indian industry has time and again demanded to take out the steel sector from the pact. But it can happen only after both the sides agree to do the same.

The bilateral trade between the countries stood at USD 14.51 billion in 2015-16 weighed highly in favour of Japan.