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EU, India locked in fresh trade tussle

Brussels, Dec. 8 (Reuters): The European Commission said on Monday it would dispute Indian trade restrictions at the World Trade Organisation (WTO), saying India’s anti-dumping measures have hit €50 million of EU exports and may break WTO rules.

“EU exporters have lost exports of more than €50 million due to these measures, but even more important is the fact that India is misusing anti-dumping instruments to prevent foreign firms from making a way into the Indian market,” it said.

Under WTO rules, anti-dumping measures can be used by a country when it feels exporters are selling goods in its market below the production cost and when these are causing damage to its own producers.

The Commission, which negotiates trade for the 15-nation EU, said in a statement it had started the first stage in dispute procedures at the WTO. It said India had not fully justified the anti-dumping measures, of which it was now the world’s largest user.

The EU has asked for consultations at the WTO, under which the two sides try to resolve the dispute by talks. If this fails, a dispute panel is set up and WTO judges decide the case.

The dispute is the latest in a series of trade spats between the EU and India.

They have a long-running fight over EU anti-dumping and anti-subsidy measures on Indian exports of bed linen.

The WTO also recently found that an EU scheme giving trade preferences to countries fighting drugs was illegal under international trade rules. The complaint against the EU system was brought by India after Pakistan benefited from it.

“Today the EU has formally requested WTO consultations with India on practically all of its anti-dumping measures affecting European exports,” the statement said.

It said the move came after growing frustration among EU exporters not only at the escalation in the number of measures imposed by India, which has now become the world's largest user of anti-dumping practices, but also at the very low standards applied.

Despite numerous discussions, it has not been possible to persuade India to align itself on WTO standards. The sectors concerned are mainly chemicals and pharmaceuticals, textiles and steel, the statement said.

EU Trade Commissioner Pascal Lamy said: “Under a rules-based system, it is essential that all players abide by the same rules and India is no exception. Ensuring fair trade should go hand in hand with clear, transparent and predictable rules. This is the way we prevent abuses of the system. I hope we will now be able to solve this matter amicably.” The request for WTO consultations concerns 27 anti-dumping measures imposed by India against the EU between 1999 and 2003.

India has, since the Uruguay Round, become the world's largest user of anti-dumping measures. Since 1995, India has imposed a total of 241 anti-dumping measures.

In comparison, the EU has imposed only 184 anti-dumping measures despite its much lower import tariffs (4 per cent on average). Anti-dumping duties imposed against the EU have also risen dramatically, from a handful in 1999 to 29 in 2003, the statement said.

The EU said it was challenging the WTO consistency of the Indian anti-dumping measures on several grounds in particular for the lack of transparency in its investigations, the poor justification for the imposition of measures and the lack of evidence linking EU exports to the harm caused to the Indian domestic industry.

The statement said India had some of the world's highest import tariffs, which average close to 35-50 per cent for industrial goods (basic import duty of 25 per cent plus other special duties), and a long history of subsidising its domestic industry.

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