Row looms over EU steel duties on India

Date: 27/01/2000

The European Commission is set to spark a furious row with India by slapping tough anti-dumping duties on the country's steel companies, just as the EU is trying to overcome New Delhi's opposition to launching a new round of world trade talks.

Lawyers acting for Indian steel firms dispute claims that EU companies have suffered as a result of Indian imports, but nevertheless expect the Commission to press ahead with plans to impose duties on 'hot-rolled' coil steel, widely used in the EU construction industry, by 7 February.

"Our impression is that measures will be imposed, unless at the very last minute the Commission received very strong opposition from member states," said one, adding: "A lot of people are very upset. We have had some very aggressive meetings with the Commission on this one."

He said the move was expected to involve a combination of anti-dumping duties plus 'counterveiling measures' to punish firms which charge low prices after benefiting from domestic subsidies. Lawyers are, however, trying to persuade the EU executive to allow Indian firms to undertake to charge higher prices instead of paying duties.

The Commission has the final say in decisions on steel trade cases, but member-state trade experts have voiced concern about the potential damage to EU-Indian relations if the Union presses ahead with punitive duties.

India is a key player in the ongoing talks over the next round of global trade liberalisation negotiations following the collapse of last month's talks in Seattle. The EU has made strenuous efforts to win New Delhi's support for a wide-ranging agenda, but India - which regards anti-dumping measures as a form of barely-disguised protectionism - is insisting that a review of anti-dumping practices must be included.

Diplomats said the decision on whether to impose the proposed duties on India, which will be taken by new Trade Commissioner Pascal Lamy, was politically "too hot" for his predecessor Sir Leon Brittan to make while he was working in a caretaker capacity after the Santer team resigned in March last year.

Brittan decided on his last day in office not to impose the provisional duties which normally precede definitive measures, although he said there was sufficient evidence for the probe to continue.

"If the Commission approves the duties then there will be massive fuss," said one trade expert. "India and the other countries see themselves as victims in these anti-dumping investigations."

Indian diplomats are warning that a decision to impose duties would "necessarily be a source of irritation" in relations between India and the EU, although they insist it is "too early to speculate" about possible retaliation.

They point out that exports of products such as hot-rolled coil are vital sources of foreign currency, which in turn finance imports of high value-added products from the EU. "Trade is not a one-way street," said one. "We need both roads to be open to the two-way traffic."

The Commission also is expected to announce similar anti-dumping measures against exporters in Bulgaria, South Africa, Taiwan and Yugoslavia next month.

The European Commission is set to spark a furious row with India by slapping tough anti-dumping duties on the country's steel companies, just as the EU is trying to overcome New Delhi's opposition to launching a new round of world trade talks.