Japan is threatening to take India to the WTO over restrictions that nearly halved its steel exports to the South Asian nation over the past year, a step that could trigger more trade spats as global tensions over steel and other commodities run high.
Such action is rare for Japan. The world’s second-biggest steel producer typically tries to smooth disputes quietly through bilateral talks, but with global trade friction increasing, Japan’s defence of an industry that sells nearly half of its products overseas is getting more vigorous.
Besides concern over India’s protection of its domestic steel industry, Japan is also worried about the more rough and tumble climate for global trade being engendered by incoming U.S. President Donald Trump, and feels it must make a strong stand for open and fair international markets.
“We need to stop unfair trade actions from spreading,” said a Japanese industry ministry official, explaining a Dec. 20 request for WTO dispute consultations with India over steel safeguard duties and a minimum import price for iron and steel products.
India imposed duties of up to 20% on some hot-rolled flat steel products in September 2015, and set a floor price in February 2016 for steel product imports to deter countries such as China, Japan and South Korea from undercutting local mills.
“If consultations fail to resolve the dispute, we may ask adjudication by a WTO panel,” the industry ministry official said. Such action could come as soon as 60 days – in February – after its consultation request was filed in December.
Tokyo says India’s actions are inconsistent with WTO rules and contributed to the plunge in its steel exports to India, which dropped to 11th-largest on Japan’s buyer list in 2016 through November, down from sixth-largest in 2015.
“We are following the WTO guidelines,” said a top official at India’s steel ministry, though adding that New Delhi is ready to sit across the table for trade talks. The date of a WTO-led consultation had not been set.