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Informist, Wednesday, Dec. 18, 2024

 

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--DGFT: Will have to wait and watch before guessing impact of US tariffs 
--DGFT: Donald Trump's reciprocity plan may be in violation of WTO norms 
--DGFT: US President-elect Donald Trump's intent is to reciprocate tariffs 
--CONTEXT: DGFT Sarangi at CII's National Exports Competitiveness Summit 
--DGFT: Will have to brace for future to deal with US, EU trade barriers 
 

 

 

NEW DELHI – US President-elect Donald Trump's threat to impose reciprocal trade tariffs on Indian goods in response to the "high tariffs" that India imposes on some inbound shipments from the US may be in violation of the norms of the World Trade Organization, Director General of Foreign Trade Santosh Sarangi said. But there had been instances when Trump, in his previous tenure, invoked provisions that allowed Washington to take unilateral measures on grounds of national security, Sarangi added. 

 

"From what I understand, his (Trump's) main intent is that reciprocity will matter in the future. From that point of view, this will be in clear violation of the WTO (World Trade Organization) norms," Sarangi said at the fourth National Export Competitiveness Summit organised by the Confederation of Indian Industry on Wednesday. 

 

Sarangi's comment comes after India woke up on Wednesday to another set of tariff threats from Trump. He emphasised his plan to implement reciprocal tariffs in response to the "high tariffs" that India imposes on specific American goods. Even during election campaigning, Trump had mentioned he would impose high tariffs on all nations that have a trade surplus with the US. India had a trade surplus of $35.32 billion with the US in 2023-24 (Apr-Mar).

 

Trump will take charge as the President of the US in January. "We will have to wait and watch before guessing the impact of US tariffs," Sarangi said.

 

As developed economies plan trade barriers--like Washington's tariff measures and the European Union's non-tariff measures like the carbon tax and deforestation laws--India will have to brace for the future, Sarangi said. 

 

In the garb of risk climate mitigation, the EU is planning to impose non-tariff barriers on India through the Carbon Border Adjustment Mechanism and regulation on deforestation products. Through these measures, the developed nations aim to boost their domestic manufacturing, according to Sarangi.

 

Under the EU's regulation on deforestation, 2026 onwards, products exported to the EU will have to meet new rules relating to the land on which they were produced. Exporters will have to ensure that the land has not been subject to deforestation or forest degradation since Dec. 31, 2020.

  

Under the Carbon Border Adjustment Mechanism, those exporting goods to the EU have to report the carbon content of the commodity, based on which, they will be taxed. The carbon tax collection is expected to begin from 2026. These measures by the EU may affect the profitability of Indian exporters, as Europe is among the top export destinations for the country. India's total trade with the EU was $137.41 bln in FY24, with imports at $61.48 bln and exports at $75.93 bln.  End

 

US$1 = INR 84.93

 

 

Reported by Krity Ambey

Edited by Akul Nishant Akhoury

 

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