‘Trade friction between U.S., India is over unequal tariffs’

USATR to discuss issue with Commerce Ministry, says Wells

April 09, 2018 10:40 pm | Updated April 10, 2018 12:22 pm IST - NEW DELHI

NEW DELHI, 06/04/2018: United States Assistant Secretary of State Alice Wells during an interview to The Hindu in New Delhi on April 06, 2018. 
Photo: V.V. Krishnan

NEW DELHI, 06/04/2018: United States Assistant Secretary of State Alice Wells during an interview to The Hindu in New Delhi on April 06, 2018. Photo: V.V. Krishnan

The friction between the U.S. and India on trade issues has arisen due to the unequal tariff regime implemented by the two countries, according to a senior U.S. envoy, even as India is trying to get an exemption from the import tariffs imposed by the U.S. on steel and aluminium.

U.S. Assistant Trade Representative Mark Linscott is visiting New Delhi on a two-day trip starting Monday, and he will meet senior Commerce Ministry officials to discuss the issue of the tariffs.

“America’s average tariff is a little over 3%, India’s is over 13% and this is where the frictions arrive,” Principal Deputy Assistant Secretary for South and Central Asian Affairs Alice Wells told The Hindu . “This is a conversation we will be having when the U.S. trade representative arrives.”

Mr. Linscott will be meeting the Commerce Ministry’s Trade Policy Division Special Secretary Anup Wadhawan and Joint Secretary Santosh Kumar Sarangi on Tuesday, according to sources in the Ministry. The agenda of the meeting is to make the case that the tariffs on steel and aluminium imposed by the U.S. should not be levied on India because the Asian nation ‘does not pose any security threat to the U.S.’

‘India seeks exemption’

“India is exploring all options for exploring non-application of the tariffs on Indian steel and aluminium products and, to this extent, consultations with the stakeholders of the industry and with the Ministry of Steel have been done,” according to a senior official in the Commerce Ministry. “On the basis of the inputs received, appropriate action will be taken and discussed with the counterpart from the U.S.”

U.S. President Donald Trump had early last month signed two proclamations that levied a 25% tariff on steel and a 10% tariff on aluminium imported from all countries except Canada and Mexico. This move was widely criticised, especially by China, which has also undertaken some retaliatory tariff measures.

China backlash

China upped the ante by imposing tariffs on key import items from the U.S. including soybeans, aircraft and cars, and has taken the U.S. to the WTO over the tariff increases on steel and aluminium. Following this, the Trump administration retaliated by imposing a 25% tariff on about 1,300 industrial technology, transport, and medical products imported from China.

India too has raised concerns about whether the tariff actions taken by the U.S. are in line with World Trade Organisation norms.

“What the U.S. has raised, whether it is WTO compatible or not, whether it is violating some rules or not, is something the country will have to individually look into,” Commerce Minister Suresh Prabhu said, following an informal mini-ministerial WTO meeting in the national capital last month.

“This is a unilateral action [by] the U.S., and any trade-related action is subjected to scrutiny on whether it is WTO compatible or not.”

He had also said India would take up with the issue with the U.S. at a bilateral level. “I think over the last year there has been a $10 billion increase in bilateral trade [between the U.S. and India], taking the figure to $126 billion, and as trade increases so do trade problems,” Ms. Wells added.

“What we... have to learn to do in both the U.S. and India is manage our trade differences effectively... as we push ahead in strategic areas where our interests are so overlapped… These are conversations that have solutions, and we believe that big important strategic relations have to be able to manage these natural and occurring differences.”

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