India’s Disapproval of EU and UK’s Steel Safeguard Action at WTO 2023
In a significant development at the World Trade Organization (WTO), India voiced its strong concerns over the safeguard measures initiated by the European Union (EU) and the United Kingdom (UK) on steel imports.
At the World Trade Organisation, India has challenged the UK and the EU for maintaining the safeguards on its steel exports.
India joined Switzerland, Brazil, China, Korea, and Russia in protesting against the safeguards that were put in place when the US implemented comparable restrictions against imports of steel and aluminium during the Trump administration at the WTO Committee on Safeguards meeting.
The European Union chose to keep implementing these protections after conducting an assessment of them lately. June 2024 is when the safeguards, or the extra taxes imposed to deter imports, are scheduled to expire.
Following a challenge to the EU’s move at the World Trade Organisation, the 27-member union modified its decision, which it now claims complies with the body’s regulations governing trade. The UK is presently reviewing the duties.
In 2018, the Trump administration increased tariffs on aluminium and steel. July of this year saw the removal of these levies on Indian exports following a bilateral agreement between the US and India.
During the committee meeting, Korea and Singapore criticised India for its lack of safeguard measures regarding isopropyl alcohol, a substance utilised in the production of disinfectants, hand sanitizers, cleansers, and even pharmaceuticals. This extra taxation on these goods will end in July of the following year.
In addition to supervising the execution of the Agreement on Safeguards, the Committee on Safeguards offers a platform for members to bring up and resolve pertinent queries and issues. The committee’s next meeting is set on April 20, 2024.
To understand the context, one must first be familiar with the concept of “safeguard measures”. These are temporary restrictions, either in the form of tariffs or quotas, imposed by a country on imports to shield its domestic industries from unforeseen surges in imports which may harm the local producers.
Amidst changing dynamics in the global steel market, and in response to concerns raised by their domestic steel industries about an over-supply, the EU and the UK separately decided to invoke safeguard measures on certain steel products. This was justified by them as a necessary step to protect their industries from disruptions in the steel market.
India argued that the imposition of such measures was inconsistent with the WTO’s Agreement on Safeguards. It held that the EU and the UK failed to demonstrate a clear and unforeseen surge in steel imports, which is a necessary condition for imposing such measures.
The safeguard actions had direct economic implications for Indian steel exporters. Given that both the EU and the UK are significant markets for Indian steel, these measures had the potential to negatively impact the Indian steel industry, potentially leading to revenue losses and affecting jobs.
India was concerned that if such measures went unchallenged, it might set a precedent where countries could easily resort to protectionist measures without genuine justification, undermining the principles of free and fair trade.
When major markets like the EU and the UK impose safeguard measures, it leads to trade diversion. Steel exporters, unable to access these markets, might flood other markets, potentially leading to similar concerns in those regions.
Such actions can strain relations between countries. In a world that is already witnessing rising protectionism, actions like these can exacerbate tensions and reduce trust among nations.
While major steel-producing nations like India and China might find alternative markets, smaller players with limited market access might find it challenging to deal with such barriers, leading to significant economic losses.
The safeguard actions on steel by the EU and the UK at the WTO highlight the challenges of maintaining a balance between protecting domestic industries and adhering to multilateral trade principles.
While countries have the right to defend their industries, it is essential that such actions are consistent with global trade rules.
As the world grapples with shifting trade dynamics, it will be crucial for nations to collaborate and ensure that the spirit of free and fair trade is upheld.
