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India’s decision to put off implementation of retaliatory import duties against the US in June this year could have been passed off as diplomatic astuteness, but postponing it yet again this month — this time till September 18 — seems to be more a case of weak knees.
The deferment of retaliation a second time round seems completely unnecessary as the Indian industry is already feeling the pinch of penal duties on its steel and aluminium imposed by the US while the US Trade Representative’s (USTR’s) office does not seem to be in a hurry to settle the matter.
The fact that countries like Canada and Mexico, which are much more closely linked to the US economy, have retaliated against US action by imposing higher tariffs on American goods, makes India’s reluctance in implementing its own set of ‘tit-for-tat’ tariffs seem cowardly.
India has no reason to fear the US as it has done nothing underhand. Retaliation is allowed by the WTO against unilateral acts going against global trade laws. The US, by imposing higher import duties of 25 per cent and 10 per cent on steel and aluminium, respectively, from a handful of countries including China, India, the EU, Japan, Canada, Mexico and Russia, seems to have moved away from the WTO’s guiding principle of non-discrimination. New Delhi did try to settle the matter bilaterally with the US and it was only when discussions failed did it notify to the WTO that it would impose retaliatory duties on US goods worth $241 million by June 20, if the US did not withdraw its penal duties by then.
On D-day, it decided to postpone implementation till August 4 to give an opportunity to a team from the USTR’s office visiting New Delhi to sort out the matter, but, despite the friendly gesture, the US did not show any interest in fast-tracking a resolution. The ideal thing for India to do on August 4 would have been to let the retaliatory duties set in. Officials could have simultaneously carried on talks with the US on a settlement and once it was reached the duties could have been withdrawn. Now, one can only hope that India is done with its quota of setting new deadlines and in case the US does not satisfactorily resolve its concern by next month, it would finally be stirred up enough to retaliate.
Amiti SenSenior Deputy Editor
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