NEW DELHI: India has decided to seek consultations with the US on the 'wrongful' imposition of penal duties on its steel exports, a first step that a country takes before dragging another to the dispute settlement mechanism of the World Trade Organsiation or WTO.
The US imposes steep penal levies in the form of countervailing and anti-dumping duties on Indian steel companies such as Essar, Tata, Jindal and Sail making exports from these companies unviable.
Earlier this week the US initiated fresh investigation against steel pipes from India despite New Delhi objecting to such duties on other steel products on the ground that the basis for calculating domestic prices of steel for imposing penalties was faulty. Commerce secretary Rahul Khullar, who is on an official visit to Washington, is likely to ask the US to begin consultations with India on the issue, a government official told ET.
"We have had our legal firms examine the issue and we are sure that the basis for their calculation of the penal levies is faulty," the official said.
Once bilateral consultations begin, India will give its legal views to the US on the issue and if the talks are unsuccesful, it could take the next step of discussing the issue at the WTO. If bilateral consultations at all levels fail, a country can then ask for setting up of a dispute settlement panel to settle the issue.
"The US is continuing its practice of faulty pricing calculations and if not checked India will never be able to export any steel products to the country," said a representative from a steel company that has stopped all exports to the US.
The US has been imposing countervailing duties or CVD, a levy to neutralise government subsidies, on steel for the last decade. Duties on Indian companies range from about 18% on Essar to over 500% for companies such as Tata and Jindal.
It also imposes antidumping duties, a penal levy on imports that are sold at higher prices in the home market of the exporter, of over 20%. India wants to challenge the US department of commerce's assumption that the iron ore sourced by Indian steel makers from NMDC is supplied at subsidised rate because it is a public body.
"This is a wrong assumption as NMDC always sells at the prevailing market prices which is determined by their exports to Japan and South Korea," the official said.
Source : economictimes.indiatimes.com