SOUTH Korea, a major steel exporter, has asked India to explain to WTO - the multilateral body that sets rules of trade between countries - why it has imposed import curbs on steel items.
If New Delhi is unable to give a satisfactory reply, Seoul can challenge the restrictions at WTO's dispute settlement body, which would then decide the fate of these curbs.
Late last year, India put a number of items on the restricted list, including steel products like motor vehicle parts, hot-rolled coils and seamless tubes and pipes. This means only the user industry can import these items against licences issued by the government.
But it may be difficult to explain these curbs as they were imposed without any specific reasons, said a government official, requesting anonymity. There is already a feeling within the government that it is safer to impose special duties like anti-dumping duties or safeguard duties to check cheap imports as WTO has provisions for these.
The committee of secretaries, headed by the Cabinet secretary, has already decided that import restrictions would be imposed sparingly. Earlier this year, it asked the commerce department to get import curbs vetted by the CoS when it was necessary to impose them.
"If a WTO panel is formed on the issue of licensing restrictions, its decision could also affect India's ability to impose similar restrictions on other products in the future. However, such processes take a long time," said the official.
In its submission to the WTO committee on import licensing, South Korea also wanted to know the steps being taken by India to ascertain that its new licensing scheme does not restrict imports.
"What measures are being taken by the Indian government to ensure that the licensing scheme does not have import restrictive effects, irrespective of whether the licensing scheme concerned is automatic or non-automatic as required in the (WTO) agreement?" states a submission made by the delegation of South Korea at WTO.
The global economic downturn has resulted in a sharp fall in international steel prices, forcing India to look at various options to protect its domestic industry.
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