At a time when multilateralism is taking a back seat — with an ineffective UN Security Council and a dysfunctional dispute settlement body at the World Trade Organization (WTO) — India appears committed to key WTO processes and has begun preparations for its eighth trade policy review after five years.
The preparations in the Ministry of Commerce come at a time when the US has all but abandoned the forum for resolving trade disputes and is instead striking bilateral trade deals, which experts fear are often not WTO-compliant. This poses significant risk for the rules-based system and for developing countries such as India, experts have warned.
While the US continues to block the appointment of judges to the WTO’s Dispute Settlement Body (DSB), the European Union has called for wide-ranging reforms. European Commission President Ursula von der Leyen last week proposed to EU leaders the launch of a Europe-led initiative to establish structured trade cooperation with Asian countries — potentially pitching for an alternative to the WTO.
The Financial Times reported earlier this week that von der Leyen suggested Brussels team up with the 11 other global economies of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) to form an institution to replace the WTO, which is struggling to contain global trade tensions.
“Asian countries want to have structured cooperation with the EU, and the EU wants the same,” von der Leyen said. “We can think about this as the beginning of redesigning the WTO… to show the world that free trade with a large number of countries is possible on a rules-based foundation.”
This is of particular importance for India, since New Delhi has been filing several disputes against the US even while negotiating a bilateral trade agreement.
On Thursday, India revised its proposal to impose retaliatory duties under WTO norms against the US over American tariffs on steel and aluminium, in view of the Trump administration’s further hike in duties.
The US first imposed 25 per cent tariffs on imports of aluminium, steel, and derivative articles on March 12. On June 3, these tariffs were further raised to 50 per cent.
“Without prejudice to its earlier notification to the Council for Trade in Goods and the Committee on Safeguards dated May 12, India reserves its right to adjust the products and tariff rates. This request is made in response to the increase in the tariff rate by the US from 25 per cent ad valorem to 50 per cent,” the WTO said in a communication on Wednesday. The communication was circulated among WTO members at India’s request.
It stated that the proposed suspension of concessions or other obligations could take the form of increased tariffs on selected products originating in the US.
“The safeguard measures would affect $7.6 billion worth of imports into the United States of the relevant products originating in India, on which the duty collection would be $3.82 billion,” it said.
Accordingly, India’s proposed suspension of concessions would result in an equivalent amount of duty collected on products originating in the US. In the May 12 communication, the projected duty collection was stated as $1.91 billion.
