WTO dispute remains amid US trade talks

Hindustan Times

18 hours ago

India will not withdraw its World Trade Organization complaints against US tariffs on steel, aluminium and automobiles unless the dispute is resolved even as negotiating teams from both sides began intensive talks in New Delhi on Thursday to finalise an early bilateral trade deal, according to people familiar with the matter.
A team led by assistant US trade representative Brendan Lynch arrived in Delhi late on Wednesday for discussions with a ministry of commerce team that began on Thursday. The talks are scheduled for two days of engagements as both countries work toward an announcement on an early portion of the Bilateral Trade Agreement (BTA), potentially this month itself.
The negotiations come against a critical July 9 deadline when an additional 16% reciprocal tariff on Indian goods is set to take effect, adding urgency to the bilateral talks.
According to two officials aware of the matter, the parallel dispute at the World Trade Organisation is expected to not interfere with the BTA negotiations and India expects the issues to be resolved through mutually agreed solutions (MAS) mechanism, as was done for seven other disputes in June and September 2023.
'India is unlikely to withdraw its complaints against the US for illegally imposing safeguard tariffs on Indian steel, aluminium and automobiles at the World Trade Organisation,' said one of these people, asking not to be named.
'It is hoped that this matter will be resolved amicably under MAS as the trade negotiation is all about greater market access for both parties,' he added
The stance reflects India's determination to challenge what it views as violations of multilateral trade rules while stressing on the need to get the BTA done. In a notice to the World Trade Organisation, India indicated it would respond to the metals tariffs by proportionately suspending concessions given to American imports. Washington rejected the notice on May 9.
The controversy around the steel, aluminium and automobile and auto components tariffs stems from the Trump administration's decision on February 10 to impose 25% levies on these imports effective from March 12, forcing India to approach the World Trade Organisation on May 9. The matter escalated when the Trump administration doubled tariffs on the metals to 50% effective from June 4, citing national security.
Besides metals, the US on March 26 raised tariffs on imports of passenger vehicles, light trucks and certain automobile parts from India to 25%. The deadline for India's one-month notice to the US on the steel and aluminium issue ends on June 8, after which it would be free to retaliate.
In its latest notice dated June 2 regarding automobile tariffs, New Delhi again sought resolution before potential retaliation after a month.
According to the Indian notice: 'India looks forward to receiving a prompt reply to this request from the United States and to setting a mutually convenient date and venue for the above-mentioned consultations. India reserves all its rights under the Agreement Establishing the World Trade Organization and its Annexes, including the Agreement on Safeguards.'
Washington has not responded to this notice yet.
A second official stated that the WTO confrontation is unlikely to interfere with the BTA talks since both countries want to conclude an interim deal by June and have held extensive talks on sectors and levies in recent months. The agreement could not only revoke the 10% baseline tax already imposed by the Trump administration from April 5, but also annul the proposed 16% additional reciprocal tariffs on Indian goods that will come into effect from July 9, this official reiterated – a position taken before.
The current talks in New Delhi are scheduled to conclude on Friday but could be extended depending on requirements, according to the second official. The bilateral discussions involve a US delegation led by officials from the United States trade representative's office and Indian officials led by chief negotiator Rajesh Agrawal, a special secretary in the ministry of commerce and industry.
Expressing optimism about resolving the trade disputes, the first official quoted above said the disputes could be resolved through mutually agreed solutions (MAS), pointing to successful precedent. 'Hopefully, the two parties may also resolve their World Trade Organisation disputes soon through MAS,' this person said.
The precedent for such resolution is encouraging. In June 2023, during Prime Minister Narendra Modi's official state visit to the US, both leaders welcomed the resolution of six outstanding World Trade Organisation disputes between the two countries through MAS. At the time, Trump's predecessor Joe Biden was in office, suggesting continuity in the mechanism despite changes in US administration.
About three months later in September, India and the US resolved their seventh and the last remaining trade dispute through MAS which was over import of poultry items, including chicken and eggs from America.
The intensive negotiations reflect the momentum built since Modi and President Donald Trump's February 13 meeting in Washington, where they launched 'Mission 500' to increase bilateral trade from approximately $200 billion to $500 billion by 2030.