India reneged on G-20 promise by raising tariffs: US

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New Delhi: Barely three weeks after India slammed the “protectionist” ‘buy American’ clause in the Obama administration’s $787-billion economic stimulus package, the US has hit back. It retorted that New Delhi, too, had imposed protectionist measures like hiking duties on items like soyabean oil, iron and steel within days of the November G-20 meeting, where member countries had agreed not to raise new trade barriers.

The latest annual report of the US Trade Representative, issued ahead of the G-20 meeting on April 2 in London, said India and other Bric economies, besides France and Argentina, have “faltered” in their commitments to the G-20 club not to come up with protectionist measures for a year from November 15, 2008.

On the brighter side, the report praised the opening up of the civil nuclear trade between USA and India.

USTR pointed out that India had raised the duty on crude soybean oil by 20% and on several iron and steel products by 5%. The World Trade Organisation had also, in a report in January this year, pointed out that India had raised tariffs on some steel products and issued notifications restricting imports of some steel products in November 2008. However, China’s move to increase VAT rebates on its exports was seen by WTO as a trade facilitation measure, as it did not involve any import restriction.

“In the days and weeks following the G-20 summit, a number of countries faltered in their commitments: Indonesia placed new licensing restrictions on at least 500 products; Argentina and Brazil sought to raise Mercosur tariffs on a range of agriculture and textiles products (although one month later, they backed away from taking such an action); on November 18, India increased the duty on crude soybean oil by 20% and the tariff on a range of iron and steel products by 5%; Russia increased taxes on certain imported foreign cars to a minimum of 35%; and France outlined plans to launch a state fund to protect French companies from foreign takeovers,” the USTR report said.

The comments are important as the US forms India’s largest trading partner. In 2008, bilateral goods trade between the two nations totalled $45 billion. Bilateral services trade totalled $19 billion in 2007.

The report said such tariff hikes are not expected of significant economies like India.