India and US Trade Dispute Possibility
India is unlikely to initiate a dispute against the United States at the World Trade Organisation (WTO) over reciprocal tariffs. Both countries are currently engaged in negotiations to reach a trade deal.
Background of the Situation
- India has sought consultation with the US regarding the 25% import duties on steel and aluminum products.
- This marks the first WTO case involving India and the US after both nations decided to withdraw all seven pending cases during the Joe Biden administration.
- The agreement allows a member to request consultations if they believe another member's safeguard measure is unjustified, which is procedural rather than escalatory.
India’s Position
- India contends that the US’s actions, labeled as security measures, are essentially safeguard measures.
- The US did not notify the WTO Committee on Safeguards regarding these measures under Article 12.1(c) of the Agreement on Safeguards.
- India has expressed a desire for a prompt response for consultations at a mutually convenient time and venue.
Current Stance and Broader Context
- India is unlikely to join China in challenging the US on reciprocal tariffs.
- Resolution of this issue is viewed as a political decision, emphasizing engagement through bilateral trade agreements.
Challenges within the WTO
- The WTO’s Appellate Body is non-functional due to the US blocking appointments of judges.
- The US claims its actions are necessary for protecting essential security interests, invoking the essential security exception in the WTO Agreement.
China’s Perspective
- China argues against unilateral tariffs, stating the trade war brings instability to the global economy.
- Emphasizes that there are no winners in a trade war.
The Fine Print
- Development occurs despite India’s consultation request over US import duties.
- Consultation request is procedural, not confrontational.
- This is the first WTO case following the withdrawal of previous India-US disputes.
- India unlikely to participate with China in WTO challenge on reciprocal duties.
- WTO’s Appellate Body remains defunct, stalling dispute resolution.
