TOKYO: Japan asked the World Trade Organization (WTO) to set up a dispute resolution mechanism, complaining that India’s safeguard duties on steel imports violated global trade rules.
In December last year, Japan had sought consultations with India over safeguard duties. Indian officials had explained to both the Japanese negotiators and the trade body that their measures were within WTO rules and necessary to protect local manufacture against unfair practices.
India imposed duties of up to 20 per cent on some hot-rolled flat steel products in September 2015 and set a floor price in February 2016 for imports to deter producers from countries such as China, Japan and South Korea from undercutting local mills. India ended the floor price regime last month, but retained the safeguard duties.
The minimum import prices imposed in February ranged from $600 a ton for coated flat steel to $550 a ton for cold-rolled steel and $425 a ton for hot-rolled steel.
As China’s economy slows down, its demand for steel has been shrinking, resulting in huge overcapacities. This has forced its steel makers to increasingly push sales to the rest of the world at very low prices.
The World Steel Association has said China’s demand for steel dropped 3.5 per cent in 2015 and will shrink another 7 per cent over two years – 2016 and 2017 – taking its demand to about 626 million tons (mt).
China, which has capacity to produce about 803mt of steel, plans to cut as much as 150mt capacity over five years as part of its supply-side reforms.
Japan, now the world’s third-largest steel producer, usually tries to deal with trade disputes through bilateral talks. However, with global trade in steel undergoing a protectionist phase and its own mills over-producing, the island nation has taken an aggressive stance.
Taiwan, too, had sought to join Japan in its dispute with India. It had sought the WTO’s permission to join Japan’s consultations with India on the complaint against the import restrictions. However, the complaint may have been thwarted with India lifting the floor price rule.
