India begins parleys on steel duty with EU
New Delhi: India is in talks with the European Union to try and mitigate the impact on Indian steel makers of any safeguard duties it may slap on steel imports as part of an ongoing duty war between the US on one side and EU and China on the other.
The US has already announced a 25 per cent duty on steel imports from August 4. In response, the EU announced late on Thursday quotas for 23 steel product categories based on the average of imports over the past three years, with a 25 per cent tariff set for volumes exceeding those amounts.
The main exporters of steel to the EU are China, India, Russia, South Korea, Turkey and Ukraine.
About 6 per cent of India's steel exports go to the EU, with much of it being exported to Italy. EU's notified tariff increases will hit some 14 steel product lines.
Steel secretary Aruna Sharma said as 2015 was a bad year for steel exports, taking that year to calculate average exports would work against India.
"We are insisting they take the figures of two years, 2016 and 2017, instead of three years to work out the average exports going from India as 2015 is an aberration."
India will talk to EU negotiators ahead of the mid-September hearing on the EU duties at the WTO. India turned a net importer of steel in the April-June 2018 quarter. Steel exports were 1.84 mt during the quarter compared with 2.1mt of imports. India had turned a net exporter of steel in the 2016-17 financial year.
Officials said they had no desire to enter into a tit-for-tat war with the EU. However, India has started taking counter measures ever since President Donald Trump took steps to protect US manufacturing by creating tariff walls against imports from Europe and Asia.
India informed the WTO some months back of its desire to raise tariff on US farm products such as walnuts, almonds and apples after the US announced increased duties on Indian steel and aluminium. India will increase tariff on Californian walnuts by 20 per cent, while the tariff on US apples make go up by 25 per cent from August 4.
Aniruddha Sengupta, a commodities trader, says: "India's duty hike on US fruits will help China and Europe in selling more here, while the tariff increase on walnuts will help Australia. Trade war will not mean better prices for local producers but rather replacement of one importer by another due to tariff distortions."<>
India's exports of aluminium and steel products are minimal and are valued at $ 1.5 billion dollars or 1 % of USA's total steel imports. Most steel analysts believe the President Donald Trump duty hike announcement which was aimed at China and possibly the European Union but also hit other exporters, was more symbolic rather than substantial. However, they have sparked off a global tariff war which could hit all nations and far more products than Trump initially planned for.
The Trump Administration's raising of duties is a fall-out of its right wing election promise of 'Making America Strong Again' with a 'America First' programme in matters of trade and government purchases. Trump has promised to cut USA's $ 800 billion trade deficit through his tariff measures.
Analysts feel that the tariff war unleashed by this right-wing economic sloganeering will make most countries more protectionist and would distort their competitiveness.