TWN Info Service on WTO and Trade Issues (Apr16/13)
22 April 2016
Third World Network

US new assault on South over use of valid trade policy instruments
Published in SUNS #8224 dated 19 April 2016

Geneva, 18 Apr (D. Ravi Kanth) - The United States along with several other developed countries on Friday (15 April) has now opened a new front against developing countries at the World Trade Organization by challenging the use of legitimate trade policy instruments by India, Indonesia, Ecuador, and Nigeria for addressing their specific domestic policy priorities, several trade diplomats told the SUNS.

The Editor-Emeritus of the SUNS, Chakravarthi Raghavan, likened the US position at the WTO to "a kind of national schizophrenia - the US at political and strategic level is wooing all these countries to line them up behind it in its global power struggle for hegemony, while at the same time unleashing its neo-mercantilist attacks on the same developing countries."

The same schizophrenia is also seen in some of the same developing countries that try to counter the US-led efforts at the WTO, while trying to hold hands with the US strategic community.

"The US neo-mercantilist attack on domestic policy space of India, Indonesia, Ecuador and Nigeria over their use of legitimate and WTO-allowed trade policy instruments was evident at the meeting of the WTO Council on Trade in Goods (CTG) on Friday last week (15 April)," he added.

At the meeting of the CTG, the United States expressed concern over the Indian government's decision to raise tariffs on 96 tariff lines in the recent budget.

The increases in Indian tariff lines, according to the US, cover items such as industrial solar heaters and solar tempered glass, and other products such as medical devices.

The increase in tariff rates, over applied rates, is below the bound tariffs of India at the WTO.

Japan along with the European Union, Canada, Chinese Taipei, Australia and Korea sought to know why India imposed minimum import prices on several steel products.

The US, the EU, Japan, Canada, Australia, New Zealand, Switzerland, Brazil, and Chinese Taipei among others asked Indonesia to explain why it chose to implement import licensing requirements, export restrictions, local content and domestic manufacturing requirements, according to people present at the meeting.

In measured responses, an Indian official told the US that it would convey Washington's queries to the capital but suggested that governments are entitled to increase tariffs for addressing their specific policy priorities in consonance with the WTO provisions.

WTO members can raise tariffs within the bound levels depending on specific challenges faced by them, according to people who attended the meeting.

Such a step involving use of policy space within the bound tariffs is a legitimate policy instrument, according to people familiar with the meeting.

The US sought to question the Indian government why it increased tariffs in the budget which is an annual macro-economic policy exercise by the government to set its priorities for the coming year.

Increases in the 96 tariff lines as mentioned by the US are allowed under the WTO rules for pursuing policy space in areas of priority.

Further, India asked the US why it was raising the issue of increase in tariff lines in the CTG meeting instead of the Committee on Market Access, which is the appropriate body to take up concerns on the increase in tariffs, according to people present at the meeting.

As regards the safeguard duties imposed on several steel products, India informed Japan that Tokyo must raise the issue in the Committee on Safeguards instead of the CTG.

India also explained to Japan that minimum import duties on steel products are aimed at grappling with the rising imports and dumping by several members, according to people present at the meeting.

India also maintained that the TBT measures involving conformity procedures are legitimate policy tools and cannot be seen as trade-restrictive measures.