By Sohrab Darabshaw
In the ongoing dispute between Japan and India over cheap steel imports, Japan has requested that the World Trade Organization set up a panel to resolve the dispute.
Early indications are that the move will be opposed by India. Japan's request comes after New Delhi imposed safeguard duties on several iron and steel products, which India claimed violated global trade rules.
India's finance ministry imposed definitive safeguard duties on imports of hot-rolled flat products of non-alloy steel in coils to counter a surge in imports from several countries, including Japan. India's stand has been that such cheap imports "caused injury to domestic steel industries."
New Delhi would have taken recourse to the safeguard measures on grounds that the import surge in hot-rolled flat products is the result of unforeseen developments. India levied 20% safeguard duties ad valorem minus anti-dumping duties on Japanese imports of hot-rolled flat products between September 2015 and September 2016; 18% between September 2016 and March 2017; 15% between March 2017 and to expire by September 2017; and 10% for a future period in September 2017 and March 2018.
As reported by MetalMiner, despite the excellent trade relations between the two nations, Japan is unhappy with India's decisions to place a minimum import price and other assorted duties to protect its domestic steel industry. It claims this has halved its steel exports to India in the last year.
Japan requested the panel came after India's failure to provide "convincing reasons" for its safeguard and anti-dumping actions. It's said the request will come up before the dispute settlement body (DSB) meeting today.
According to a report in The Financial Express, India opposes Japan's move. Quoting experts, the report said since WTO cases can be settled with rulings that were "prospective," any adverse judgment would not affect India significantly.
In a parallel development, there are reports coming in that India would use make it compulsory for Indian customers to use domestically produced steel, to stop inroads made by steel products from other countries, including China.
India may soon mandate the use of local steel in government infrastructure projects worth billions of dollars, pitching it as a WTO-compliant protectionist measure.
Quoting news agency Reuters, the report said the Indian government expects to move to boost sales of local companies such as JSW Steel and Tata Steel, and eventually attract global steelmakers such as ArcelorMittal (NYSE:MT) and POSCO (NYSE:PKX) to invest in the country.
India is the world's third-largest steel consumer, but its current level of capacity utilization by domestic steel producers is below 80%.