IMPLICATIONS OF UNITED STATES STEEL TARIFFS ON INDIAN STEEL IMPORT PATTERNS: A CASE OF INDIA’S PREFERENTIAL TRADE AGREEMENTS AND INTERNATIONAL TRADE LAW

Abstract

The study has attempted to analyse the factors responsible for the surge in imports of steel products in India immediately after the implementation of tariffs on steel products by the United States under Section 232 of the Trade Expansion Act of 1962. To identify the factors, the study has mainly utilized Bilateral Revealed Comparative Advantage, Export Intensity Index, and SMART partial equilibrium modelling tool as methodology. The key finding of the study shows that India witnessed a sudden surge in imports post the implementation of these tariffs, specifically from its preferential trade partners. India’s preferential trade partners enjoy a significant comparative advantage in steel products and have a very high export intensity in India. These countries were also found to be having very high exports to production ratios. It was also revealed that due to the reduction of import tariffs by India, there will be a significant increase in the imports of steel products, not only due to trade creation but also due to significant trade diversion. The study also looked at the compatibility of these tariffs with the General Agreement on Tariffs and Trade (GATT)/World Trade Organization (WTO) law and WTO rulings on these measures to suggest key trade policy measures that can be adopted by India to counter such situation in future. The study suggested two key policy measures that could be adopted by India in the future to tackle any such measures: one is the Auto-Trigger Safeguard Mechanism (ATSM) & the other is the imposition of Suo Motu safeguard measures on steel products.