|
||
|
TWN
Info Service on WTO and Trade Issues (Aug25/03) Geneva, 5 Aug (D. Ravi Kanth) — India on 4 August hit back at United States President Donald Trump’s latest threat to substantially raise tariffs against India, saying that New Delhi “has been targeted by the United States and the European Union for importing oil from Russia after the commencement of the Ukraine conflict.” India severely criticized the US and the EU after Washington threatened that the US “will be substantially raising the tariff paid by India” on its exports to the US market because India is allegedly buying massive amounts of Russian oil and selling much of it “on the open market for big profits,” said people familiar with the development.In what appears to be a new phase of “coercive bullying” by the Trump administration, attempts are seemingly now underway to fracture the sovereignty of countries in adopting their own independent policies that have nothing to do with trade surpluses or de-industrialization in the US, said people familiar with the development. The World Trade Organization (WTO) has not only remained silent on these extraordinary actions of the US administration through its so-called reciprocal tariffs against various countries, but also appears to be busy in making preparations for the visit of a US Congressional delegation to the WTO on 6 August, said people familiar with the development. For all practical purposes, the US appears to have assumed the role of an international trade organization by unilaterally imposing tariffs on some rather dubious considerations of countries having trade surpluses with the US as well as their trade policies seemingly decimating the US industry, and even suggesting an enforcement role for its actions, said people familiar with the development. US THREAT & INDIA’S RESPONSE Writing on his Truth Social media website on 4 August, President Trump alleged that “India is not only buying massive amounts of Russian Oil, they are then, for much of the Oil purchased, selling it on the Open Market for big profits.” “They [India] don’t care how many people in Ukraine are being killed by the Russian War Machine. Because of this, I will be substantially raising the Tariff paid by India to the USA. Thank you for your attention to this matter!!!…” President Trump wrote. In the strongest statement yet against President Trump’s tariff threat, India’s Ministry of External Affairs said: “India has been targeted by the United States and the European Union for importing oil from Russia after the commencement of the Ukraine conflict. In fact, India began importing from Russia because traditional supplies were diverted to Europe after the outbreak of the conflict. The United States at that time actively encouraged such imports by India for strengthening global energy markets stability. 2. India’s imports are meant to ensure predictable and affordable energy costs to the Indian consumer. They are a necessity compelled by global market situation. However, it is revealing that the very nations criticizing India are themselves indulging in trade with Russia. Unlike our case, such trade is not even a vital national compulsion. 3. The European Union in 2024 had a bilateral trade of Euro 67.5 billion in goods with Russia. In addition, it had trade in services estimated at Euro 17.2 billion in 2023. This is significantly more than India’s total trade with Russia that year or subsequently. European imports of LNG in 2024, in fact, reached a record 16.5mn tonnes, surpassing the last record of 15.21mn tonnes in 2022. 4. Europe-Russia trade includes not just energy, but also fertilizers, mining products, chemicals, iron and steel and machinery and transport equipment. 5. Where the United States is concerned, it continues to import from Russia uranium hexafluoride for its nuclear industry, palladium for its EV industry, fertilizers, as well as chemicals. 6. In this background, the targeting of India is unjustified and unreasonable. Like any major economy, India will take all necessary measures to safeguard its national interests and economic security.” Last week, President Trump imposed a reciprocal tariff of 25% on Indian goods entering the American market, while imposing a lesser tariff of 20% on India’s neighbours, Pakistan and Bangladesh. The tariffs are expected to come into effect on 7 August. In addition to the tariffs, President Trump had spoken of Russia and India in rather derogatory terms, saying that he does not care “what India does with Russia.” Seemingly ratcheting up pressure on both countries, President Trump had said, “They can take their dead economies down together, for all I care. We have done very little business with India, their tariffs are too high, among the highest in the world.” On 3 August, President Trump’s White House deputy chief of staff, Mr Stephen Miller, told Fox News, “What he [President Trump] said very clearly is that it is not acceptable for India to continue financing this war by purchasing the oil from Russia.” In response to President Trump’s continued threats of imposing higher tariffs on India and Brazil, the two countries reportedly rejected the demands made by the White House to stop purchases of Russian oil. While the Indian government has not officially put out any statement saying that it is going to stop purchasing Russian oil, the chief advisor to the Brazilian President, Mr Celso Amorim, told CNN on 3 August that Brazil opposes economic sanctions under any circumstances, unless they are authorized by the UN Security Council. While news reports, attributed to sources in the Indian government, suggested that there would be no immediate changes in the Indian purchases of Russian oil, the Indian Foreign Ministry spokesperson Randhir Jaiswal said that India has a “time-tested partnership” with Russia. “On our energy sourcing requirements … we look at what is there available in the markets, what is there on offer, and also what is the prevailing global situation or circumstances,” he said. IS US A UNILATERAL WTO? For all practical purposes, the US is not only setting a new tariff floor for its trading partners through allegedly coercive threats but has also declared an enforcement role for its unilateral actions, said people familiar with the development. In an interview with the CBS broadcast channel on 3 August, the US Trade Representative (USTR) Ambassador Jamieson Greer said the reciprocal tariff rates announced for countries will not be changed in the coming days. He said, “I think a lot of these (rates), well I know a lot of these are set rates pursuant to deals,” which have not been officially made public other than through brief White House statements. According to Ambassador Greer, “some of these deals are announced, some are not and others depend on the level of the trade deficit or surplus we may have with the country. So, these tariff rates are pretty much set.” “Because again,” he continued, “when the president is looking at this, he looks at potential deals, and we bring him potential concessions from countries and the things they might want to do.” The USTR maintained that President Trump “compares that to the potential tariff that might be applied to try to get that deficit down. And then talking to his advisors, he makes a call on this. And sometimes, the country will come back and make additional concessions that make it more appropriate.” According to the USTR, President Trump is “trying to get at the deficit. He’s trying to reshore manufacturing … bring manufacturing jobs back to America.” Last week, President Trump fired the chief of the US bureau of labour statistics because of a steep fall in the job numbers in July, accusing the head of labour statistics for allegedly manipulating the data. The USTR was asked during the CBS interview as to “what does that data indicate to you about the impact of your tariffs?” “I think a lot of companies are waiting to see if the tax bill was going to come through with the expensing for capital goods and things like that. And so, I think now, a lot of that data comes prior to One Big, Beautiful Bill. Now that we have One Big, Beautiful Bill, and we have a better sense of where the taxes are going, I think we’re going to see a much, we’re going to see more investment,” he said. Asked to comment why President Trump hiked the tariff on Canadian goods entering the American market to 35%, the USTR justified the tariff on Canadian goods by saying that Canada retaliated against the 25% fentanyl- related tariff, adding that “the only other country in the world who retaliated on tariffs was the Chinese.” The USTR told CBS that any country attempting to take retaliatory measures would be tantamount to challenging the “integrity” of the US action. “And so, if the President’s going to take an action and the Canadians retaliate, the United States needs to maintain the integrity of our action, the effectiveness that we have to go up to,” said the USTR. “Our view is the president is trying to fix the terms of trade with Canada. And if there’s a way to a deal, we’ll find it. And if it’s not, we’ll have the tariff levels that we have.” When asked why Canada is being punished for supporting statehood for Palestine, the USTR suggested that “the president of the United States has his foreign affairs power where he can manage relations under the Constitution with foreign countries.” Ambassador Greer said: “Congress delegated to the president the ability to take economic action in response to national emergencies in the International Economic Emergency Powers Act [IEEPA], and, for example, the Treasury Department, they have a number of sanctions where they can actually cut off a country’s trade with the United States, prohibit goods, cut them off from our financial system for geopolitical reasons.” So far, the US Congress has not formally given any approval to the Trump administration to impose any reciprocal tariffs, or economic sanctions, under the IEEPA, and the issue is currently being challenged in the US courts. When asked why the US has imposed a 50% tariff on Brazil – a country with which the US currently has a trade surplus – on extraneous considerations, the USTR said: “There’s a 10% tariff on Brazil because we have a surplus with them. That’s the reciprocal tariff. And then there’s a 40% tariff that the president has chosen to do under the International Emergency Economic Powers Act, like we would do any sanction where we see geopolitical issues.” Further, the USTR said, “The president has seen in Brazil, like he’s seen in other countries, a misuse of law, a misuse of democracy, what one might call lawfare. It is normal to use these tools for geopolitical issues. I mean, sanctions, we’ve been using them for years with all kinds of countries.” To another question on whether he viewed tariffs and economic sanctions as the same, the USTR said that “the President of the United States, historically, whether it’s a Democrat or a Republican, they have used IEEPA to impose sanctions for all kinds of geopolitical reasons in all kinds of countries.” According to Ambassador Greer, “sometimes it’s countrywide. Sometimes it’s specific to certain individuals, and, often, foreign leaders and foreign officials.” Incidentally, the IEEPA has been the sole or primary statutory authority invoked in 65 out of the 71 emergency declarations made since the National Emergencies Act (NEA) was enacted in 1976. When asked whether the US will impose tariffs of above 80% on China if it does not comply with the 12 August deadline, the USTR said, “so that’s what’s under discussion right now. I would say that our conversations with the Chinese have been very positive. We have discussions at the staff level, at my level. President Xi and President Trump have had conversations.” “We’re working on some technical issues (with China), and we’re talking to the President about it,” the USTR maintained. “I think it’s going in a positive direction. I’m not going to get ahead of the president, but I don’t think anyone wants to see those tariffs snap back to 84%.” When asked what are the commitments that the US secured from China at the recent third round of discussions in Stockholm, Sweden, the USTR said: “So yes, we did, yes. We talked about – and I won’t go into detail because they’re confidential conversations between two governments. But they really focused on rare earth magnets and minerals. China has put a global control on the world. And so for the United States, we’re focused on making sure that the flow of magnets from China to the United States and the adjacent supply chain can flow as freely as it did before the control.” However, in a report in the Wall Street Journal (WSJ) on 4 August, titled, “China is choking supply of critical minerals to Western defence companies,” it is alleged that “China is limiting the flow of critical minerals to Western defense manufacturers, delaying production and forcing companies to scour the world for stockpiles of the minerals needed to make everything from bullets to jet fighters.” After having paralysed the WTO’s enforcement function, the USTR has seemingly indicated how the US is going to enforce the trade deals that the Trump administration has imposed on countries over the last three months. According to a post on the International Economic Law and Policy (IELP) blog, the USTR was asked by Bloomberg as to “how will this administration judge what is a violation and what the consequences of that would be?” The USTR explained the features of the US enforcement function to Bloomberg. He said: “So, for example, we put out a fairly detailed joint statement with Indonesia, and we’re finalizing the underlying agreement. And in there, you can see that they’ve made commitments on tariff levels where they’re going to remove all of their tariffs. They’ve made commitments on non-tariff barriers with respect to agricultural inspections and the way they treat certain digital trade. And so our office, which has hundreds of people, the Office of the US Trade Representative, they watch this, and they make sure that Indonesia actually does what it’s supposed to do. And if they don’t, the President has his tariff authority. I mean, all of the deals are premised, and the modified rates for these countries are premised, on them actually opening their market, making the investment and purchase commitments they’ve agreed to. And if you don’t, you can have the tariffs go back into place. This is basic trade enforcement, and that’s what we intend to do here.” In short, the USTR seems to be conveying the unmistakable message of a full retreat by the US from the global trade rules, with the WTO being its custodian for the past 30 years. It remains to be seen what will developing countries do in light of such blatant unilateral actions by the US, which have never been witnessed over the past 80 years. If these countries don’t rally around a constructive South-South agenda, they could be bearing the brunt for years to come, said people familiar with the development. +
|
||
