India may retaliate against EU duties on steel

With bilateral consultations with the European Union (EU) earlier this month failing to break the logjam over extension of safeguard duties on its steel exports, India has “reserved the right” to retaliate in equal measure by imposing extra duties on imports from the 27-member bloc, a senior official said.

The EU has extended the safeguard duties on steel imports, which were expiring this month, by another two years till 2026. This is the second extension of the safeguards that take the form of Tariff Rate Quota (TRQ) and were first imposed in 2018. With the latest extension the safeguard would have run for eight years. Under World Trade Organisation (WTO) rules another safeguard measure for these product categories of steel could then not be put in place for another eight years.

Under the TRQ mechanism every country is issued a quota for export of 26 steel products to the EU. This quota was fixed at 105% of the average imports between 2015 and 2017 from that country. Any exports beyond this quota attract extra 25% duty.
India is one of the countries affected by this measure as it has a substantial interest in steel exports to the EU. Last financial year India’s exports to the EU of iron and steel and their products was $ 6.64 billion up from $ 6.1 billion in 2022-23.
 

The UK also has TRQs for steel imports. When the consultation process between India and UK did not result in a positive outcome in August 2022 India informed the World Trade Organisation (WTO) that it would put retaliatory duties on imports from the UK that would total $ 247.7 million. This was to be achieved through additional 15% import duty on 22 products including whiskey, silver, gold and diesel engine parts.India’s steel and product exports to UK were $ 743.09 million in 2023-24 as against $ 565.7 million in 2022-23.

These duties, however, have not been notified till now. WIth the EU also the same action is expected. Before retaliatory action India will have to notify WTO on the extent of injury the safeguard duties are causing to the domestic industry and reason for retaliatory action.

India took retaliatory action against additional duties on its steel and aluminium exports to the US by the Trump administration by imposing additional duties on 28 products. These tit-for-tat duties were challenged in the WTO’s dispute settlement system. Last year both countries agreed to withdraw their disputes at WTO and additional duties.