Steel War: India Criticises US Bid For Higher Protection

New Delhi, December 24: | Updated: Dec 25 2002, 05:30am hrs
India has criticised attempts made by the United States (US) to extend a higher level of protection to its steel sector by seeking to include measures with a subsidy-like effect within the ambit of the Agreement on Subsidies and Countervailing Measure (ASCM).

In a proposal on addressing market distortions in the global steel sector submitted to the World Trade Organisation (WTO) negotiating group on rules (NG Rules), the US stated there was a need for addressing preferential access to financing and steel production inputs through strengthened subsidies disciplines. The disciplines should also address instances where governments absolve steel firms of generally applicable obligations, it said.

India responded to the proposal by submitting a paper last week to NG Rules asking the US to give examples of what it exactly meant by subsidy-like effect.

The paper pointed out that it appeared that the US was seeking to include in ASCM disciplines on measures with a subsidy-like effect even though such measures may not be considered a subsidy under Article 1 of ASCM.

India asked the US to clarify whether strengthened subsidies disciplines referred to disciplines under ASCM. It further asked whether the proposed disciplines would be generic in nature or be limited to steel issues.

If the US wanted the disciplines to be limited to steel, the paper pointed out, it could not be reconciled with the fact that there was no mandate for WTO to undertake sectoral negotiation on steel issues.

Moreover, the US proposal did not take into consideration the development dimension which was a crucial issue for developing countries, India alleged.

The paper stressed that any discipline on trade distorting measures which might be agreed to must take into consideration flexibilities available to developing countries under the subsidies agreement.