India launches WTO case against U.S. steel duties

GENEVA Thu Apr 12, 2012 11:04pm IST

1 of 2. Deepak, 13, the child of a labourer, runs besides stacked rolls of iron coil at a railway yard in Chandigarh January 28, 2011.

Credit: Reuters/Ajay Verma/Files

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GENEVA (Reuters) - India has launched a trade dispute to challenge U.S. duties on certain steel products, the World Trade Organization said on Thursday.

The WTO gave no details but said India had "requested consultations" with the United States - the first stage of a formal trade dispute - over U.S. countervailing duties.

Countries impose countervailing duties - punitively high import tariffs - when they suspect another country of gaining an unfair trade advantage through subsidies.

The United States Commerce Department in March set a preliminary import duty of nearly 286 percent on a circular welded carbon-quality steel pipe from India to offset government subsidies. A final decision on duty rates is expected by August.

The United States imported about $64.5 million of the steel product and $50.1 million from Vietnam, which also was hit with much lower countervailing duties of just over 8 percent.

U.S. companies Allied Tube and Conduit, JMC Steel Group, Wheatland Tube and United States Steel Corp (X.N) had petitioned the government last year for import relief.

An Indian official told Reuters earlier this week that India was preparing a challenge at the WTO, and said Washington had imposed the countervailing duty because a portion of the iron ore used to produce the pipes came from India's top iron ore miner NMDC (NMDC.NS), a state-run firm that supplies steelmakers such as Tata (TISC.NS), Jindal (JNSP.NS) and Essar.

The U.S. argument was that "because NMDC is a public sector undertaking, it is selling this iron ore ... for a song, and therefore implicitly subsidising a private-sector enterprise. This is the allegation," the official said.

But he said that Indian iron ore prices were determined by the domestic market.

"So where is the question of a subsidy being paid? There is no subsidy."

The United States says India's export restrictions on iron ore amount to an effective subsidy of the industry.

"In 2010 India became the world's sixth largest steel producing economy, and it appears the Indian government is using these measures to improve supply and lower prices of inputs used by India's rapidly growing steel industry," said a trade summary on India published by the U.S. Trade Representative's office.

Last October the United States sent the WTO a list of 50 Indian government measures that it said amounted to unfair subsidies that had not been notified, as required by the WTO, and threatened to slap duties on them if India did not notify them promptly.

Included on the list were loans from India's Steel Development Fund (SDF), with the 2010-2011 annual report of the Indian Ministry of Steel cited as evidence.

The ministry's report said the SDF was providing financial assistance for research and development and 64 projects had been approved in 2010, at a cost of 4.42 billion Indian rupees, including 2.78 billion rupees from the fund. The SDF had already paid out 1.39 billion rupees, it said.

India is also requesting consultations at the WTO over the cost of U.S. work visas and over a recent spike in Indian visa applications being turned down.

If the disputes are not settled by consultations, India may ask the WTO to set up dispute panels to adjudicate on the cases.

(Reporting by Tom Miles; Editing by Michael Roddy)

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