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  5. India’s Safeguard Measure on Imports of Iron and Steel Products from Japan Inconsistent with the WTO Agreement

India’s Safeguard Measure on Imports of Iron and Steel Products from Japan Inconsistent with the WTO Agreement

The panel upholds Japan's claims on this matter

November 7, 2018

On November 6, 2018, the World Trade Organization (WTO) circulated a panel report regarding India’s safeguard measure on imports of iron and steel products from Japan, a matter under examination by the WTO at the request of Japan. The report presents a ruling, upholding Japan’s claims, that India’s safeguard measure on iron and steel products is inconsistent with the WTO Agreement.

1. Outline

On December 20, 2016, Japan requested consultations with India under the WTO Agreement regarding India’s safeguard measures on imports of iron and steel products from Japan, and on February 6 and 7, 2017, Japan held consultations with India. However, as the consultations failed to settle the dispute of the parties, on April 3, 2017, a panel under the WTO Agreement was established for this matter.

In January and May 2018, the panel convened oral hearings, and Japan claimed that India’s safeguard measure on products in question is inconsistent with the Agreement on Safeguards (SG Agreement) and the General Agreement on Tariffs and Trade (GATT).

Subsequently, the WTO circulated a panel report which upholds most of Japan’s claims and recommends that India bring its measure into conformity with the Agreements.

2. Details of the decision

The report upheld most of Japan’s claims as below:

  1. India’s imposition of the safeguard measure is inconsistent with Article XIX:1 (a) of the GATT 1994 since India failed to demonstrate in its determination that an increase in the imports of products in question caused by an “unforeseen developments” and an “effect of the obligations incurred under the GATT 1994”.
  2. India’s imposition of the safeguard measure is inconsistent with Articles 2.1, 4.2 (a) of the SG Agreement and Article XIX:1 (a) the GATT 1994 since India failed to make reasoned findings in its determination that an increase in imports of the products in question was recognized as an “increased imports,” a requirement for the imposition of the safeguard measure under the SG Agreement, and the country also did not assessed the “increased imports” based on any objective data.
  3. India’s imposition of the safeguard measure is inconsistent with Article 4.2 (a) of the SG Agreement since India failed to appropriately examine the injury factors (i.e., profits and profitability) of the domestic industry in determining the “serious injury” to the domestic industry and also failed to determine the injury based on any objective data.
  4. India’s imposition of the safeguard measure is inconsistent with Article 4.2 (b) of the SG Agreement since India failed to make reasoned findings in its determination as to the causal link between the increase in imports and the serious injury to the domestic industry, and also failed to demonstrate factors other than increased imports did not cause “serious injury.”
  5. India’s imposition of the safeguard measure is inconsistent with Article 12.2, 12.3 and 12.4 of the SG Agreement since India failed to meet the obligations under the SG Agreement in terms of other procedures involving the measure.
  6. The panel recommends India to make the safeguard measure consistent with the Agreements to the extent that the measure continues to have any effects, while the measure has already expired.

Note: The panel did not uphold Japan’s claims involving the definition of the domestic industry in India and the obligation of immediate notification to the Committee on Safeguards. Moreover, the panel did not decided on the matter that India’s imposition of the safeguard measure was beyond the extent necessary to prevent or remedy serious injury and to facilitate adjustment (Articles 5.1 and 7.1 of the SG Agreement).

3. Future schedule

Parties concerned may appeal to the WTO Appellate Body within 60 days from the circulation of the panel report. If no appeal is filed, the panel’s decision in the report will become the WTO’s final decision.

4. References

(1) Previous press releases concerning this matter

(2) Panels under the WTO Agreement

If consultations fail to settle a dispute, based on the request from the complaining party, the WTO panel, a quasi-judicial third party, examines the matter and makes rulings regarding its consistency with the WTO Agreement. If a party is not satisfied with the panel rulings, it may appeal to the WTO Appellate Body.

Reference: Minimum Import Price System

Japan also requested consultations under the WTO Agreements on December 20, 2016, with regard to India’s minimum import price system for iron and steel products. However, this system expired on February 4, 2017, and this issue was not subject to the discussions by the panel.

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