India Moves WTO Against EU’s Restrictive Steel Safeguards, Threatens Counter-Duties
India has formally challenged the European Union’s safeguard measures on certain steel products at the World Trade Organization, seeking to address what it considers unfair trade restrictions. In a communication dated March 27, 2025, India reserved the right to suspend equivalent concessions under the Agreement on Safeguards, citing the EU’s restrictive tariffs on steel imports. These measures, which were extended until 2026, have caused substantial economic losses for India’s steel sector. India’s decision to approach the WTO comes after several rounds of consultations failed to resolve the issue.
The EU has imposed safeguard tariffs on steel products to protect its domestic steel industry from a surge of cheaper imports, including from countries like India. The EU safeguard measures include a Tariff Rate Quota system, which limits the quantity of steel products imported at lower tariffs, with an additional 25% duty on out-of-quota imports. India argues that these measures violate international trade rules and have negatively impacted its steel exports to the EU, causing a cumulative loss of USD 6.92 billion since the imposition of the safeguards in 2018.
India’s Trade Losses Due to EU Measures:
• Annual Trade Loss: For the year 2023-2024, India estimates an annual trade loss of USD 1.472 billion due to the EU’s safeguard tariffs on steel. This loss is accompanied by duty collections of USD 368 million at the 25% tariff rate.
• Cumulative Loss: Since the initial imposition of the safeguard measures in 2018, India has faced a cumulative trade loss of USD 6.92 billion, leading to potential duty collection of USD 1.73 billion.
India has raised concerns over the negative impact on its steel industry, which relies on export markets such as the EU. Despite this, the EU extended these safeguard duties by two years in 2024, further aggravating the situation for Indian exporters.
The Dispute and WTO Involvement:
• Consultations with EU: On March 19, 2025, India and the EU held online consultations to discuss the safeguard measures. However, the two sides failed to reach a mutually agreeable resolution regarding trade compensation or the continued safeguard measures.
• WTO Mechanism: India’s action under the WTO dispute settlement process seeks to challenge the EU’s measures, which India views as inconsistent with global trade norms. The WTO has mechanisms for resolving such disputes, but the outcome remains uncertain as both sides continue to assert their positions.
India’s Response and Retaliation:
• Countermeasures and Retaliatory Tariffs: In its communication to the WTO, India has stated its intent to impose retaliatory tariffs on selected goods from the EU if the safeguard measures are not addressed. India’s countermeasures could include duties on a wide range of European products, which would directly impact EU exports.
• Potential WTO Ruling: If the WTO rules in favor of India, it could pave the way for retaliatory tariffs. However, this process can be lengthy and uncertain, with the possibility of prolonged negotiations and disputes over enforcement.
Impact on India-EU Trade Relations:
• Export Dynamics: In 2023-2024, India’s iron and steel exports to the EU increased to USD 6.64 billion, up from USD 6.1 billion in the previous year. However, the safeguard measures have limited the growth potential of Indian steel exports to the European market.
• WTO’s Role: The dispute highlights the role of the WTO in resolving trade tensions, particularly in industries where national interests and global trade rules clash. The outcome of this case could set an important precedent in how safeguard measures are viewed under international trade law.
• Free Trade Agreement Negotiations: India is also in negotiations with the EU for a Free Trade Agreement aimed at improving trade relations. This dispute may impact the trajectory of these talks and could influence future trade policies between the two economic blocs.
Key Takeaways:
• India’s WTO Challenge: India has approached the WTO to challenge the EU’s restrictive safeguard tariffs on steel products, citing significant economic losses.
• Trade Losses: India’s steel sector has faced a cumulative trade loss of USD 6.92 billion since the imposition of the safeguard measures in 2018.
• EU’s Safeguard Measures: The EU has extended its safeguard tariffs on steel imports until 2026, imposing a 25% duty on out-of-quota imports.
• Retaliatory Tariffs: India has threatened to impose retaliatory tariffs on select EU goods if the dispute is not resolved through WTO proceedings.
• Consultations Fail: Consultations between India and the EU on the issue did not result in a resolution, leading to India’s formal WTO challenge.
• Impact on India-EU Trade: India’s steel exports to the EU saw a modest increase in 2023-24, but the safeguard measures continue to limit trade potential.
• WTO’s Role in Global Trade: The dispute underscores the WTO’s role in adjudicating trade disputes, particularly in cases involving safeguard measures and national interests.
