India only reserved right to impose retaliatory duty on US goods; may resolve issue via BTA talks

New Delhi: India has "only" reserved its right under WTO norms to impose retaliatory duties on certain American products over the US' steel and aluminum tariffs and it may choose to resolve the issue through the ongoing bilateral trade agreement (BTA) negotiations between the two countries, an official said on Tuesday.

The official said earlier also a similar notification has been issued to the World Trade Organization (WTO) by India against the European Union over EU's steel safeguard measure of 2019 and 2021, but it has not been implemented to date.

"Accordingly, India's current notification to WTO Council for Trade in Goods against US' steel and aluminium tariffs only reserves India's right under the Agreement on Safeguards to retaliate at any future date. However, it is for India to decide whether to effectuate these proposed retaliation after 30 days of the notification or later or resolve it as part of ongoing BTA negotiations," the official said.

Commerce and Industry Minister Piyush Goyal will lead a team of senior Indian officials to Washington starting May 17 for discussions with their US counterparts on the proposed BTA. The chief negotiators of both countries will hold meetings from May 19-22.

The two countries are negotiating the pact to boost two-way commerce to USD 500 billion by 2030 from the present USD 191 billion.

According to trade experts, India's move to reserve its retaliation rights could serve as a bargaining chip in the proposed trade deal.

This is not India's first brush with safeguard retaliation.

In June 2019, India imposed higher tariffs on 28 US products after the US removed India from its Generalized System of Preferences (GSP) and continued its 25 per cent and 10 per cent tariffs on certain steel and aluminium products. That action, which covered about USD 240 million in trade value, marked India's first use of WTO-sanctioned retaliation.

However, the duties were withdrawn in September 2023, following the decision of both countries to resolve seven WTO disputes.

That time also, the US had initially imposed additional duties on certain steel (25 per cent) and aluminium (10 per cent) products in March 2018. On May 18, 2018, India notified WTO Council for Trade in Goods of India's proposed suspension of concessions.

This notification reserved India's right to effectuate the proposed suspension, however, it was implemented by India after a year, in June 2019.

"Additionally, regarding the EU definitive steel safeguard measure, India had notified WTO of India's proposed suspension of concessions, reserving its right to effectuate the same. The proposed suspension of concessions has not been implemented till date," the official added.

The proposed suspension of concessions could take the form of increased tariffs on selected US products. While India has not disclosed those items yet, in a similar move in 2019, it had imposed retaliatory tariffs on 28 US products, ranging from almonds and apples to chemicals.

The notice, issued on May 12, marks India's invocation of its rights under a provision of the WTO Agreement on Safeguards (AoS).

This legal provision allows a country to retaliate when another member imposes safeguard measures without proper notification or consultations.

India had sought consultations with the US in April, but Washington responded that the tariffs were imposed on national security grounds and should not be considered safeguard measures.

According to the WTO notification, US safeguard duties impact about 7.6 billion worth of Indian exports, resulting in an estimated USD 1.91 billion in additional duties collected by America.

India intends to recover this amount through retaliatory duties on selected American goods.