India and the US are in the final stages of setting up a joint monitoring mechanism to enable domestic exports of certain steel and aluminium products to America without paying extra duties, an official said.
Indian exports of these products attract additional duties in the US as Washington, in 2018, imposed a 25 per cent import duty on steel products and 10 per cent on certain aluminium products on grounds of national security.
In retaliation, India in June 2019 imposed additional customs duties on 28 American products.
During the visit of Prime Minister Narendra Modi in June, the two countries decided to remove trade irritants and as part of that both sides agreed to end six trade disputes at the World Trade Organisation (WTO).
They have mutually resolved those six disputes and India has decided to remove additional duties on eight US products, including chickpeas, lentils and apples, which were imposed in 2019.
The US, on its part, has agreed to provide greater market access to certain Indian steel and aluminium products, a development which would help increase outbound shipments of these goods.
"Setting up of a joint monitoring mechanism is at the final stages. It will help in monitoring exports of these products and resolve disputes if any, the official said adding the mechanism would help keep a tab on the exports and about applications being entertained by America for importing these goods without additional duties.
After Modi's US visit in June, the commerce ministry stated the US agreed to grant market access to steel and aluminium products under the exclusion process of Section 232 of the Trade Expansion Act 1962.
This market access will restore opportunities for Indian steel and aluminium exporters, which were restricted since June 14, 2018, because of the US 232 measure under which additional duties were levied on steel and aluminium products respectively.
As part of the market access, going forward, the US Department of Commerce will clear 70 per cent of steel and 80 per cent of aluminium applications for products originating in India, the commerce ministry had said adding it would provide significant impetus to raise India's steel and aluminium exports by about 35 per cent.
These applications will be made under the exclusion process of Section 232 by the importers on behalf of the exporters.
The US had imposed these duties using Section 232 of an act that permits the president to restrict imports.
The additional tariffs had impacted USD 1.21 billion worth of India's exports of steel and aluminium to the US in 2018. The duty burden on exports due to additional US tariffs amounted to USD 241 million.
The US had settled a similar dispute with Canada and Mexico at the end of 2019. While steel and aluminium imports from these countries got exemption from the extra tariffs, called Section 232 tariff, the agreement provided for aggressive monitoring and a mechanism to prevent surges in imports of steel and aluminium.
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