The World Trade Organization (WTO) judges ruled on Monday that the U.S. violated its trade rules by levying a tariff on Chinese and Indian steel products.

Many of the 160 members of the WTO are concerned that the U.S. is illegally protecting its local producers through the duties it imposes on certain imported products, trade diplomats said. Both cases were investigated by the two panels of judges for almost two years, according to Reuters.

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In the US$7.2-billion trade dispute with China, the WTO panel found that the U.S. went beyond its boundaries by imposing countervailing duties in response to the subsidies that China allegedly passed on to exporting companies.

According to the 1964 Marrakesh accords, the said duties can only be imposed when there is enough evidence to prove that the state-owned entities giving out the subsidies are "public bodies." Washington, however, was unable to produce substantial evidence for this and the panel found that its calculations of the subsidies to some Chinese producers were faulty.

The panel told the U.S. to align its measures with the WTO's subsidies and countervailing measures (SCM) agreement.

In a statement, China's Ministry of Commerce urged the U.S. to respect the rulings and rectify its "abusive" trade practices to maintain "fair competition" for Chinese firms. The U.S., on the other hand, said it is carefully considering its options and will take necessary action to maintain the strength and effectiveness of its trade remedy measures.

The trade dispute with India involved steel producer Tata, Essar, and Jindal which get their supply from state-run mining firm NMDC. In this case, however, the ruling was not as clear as that in the Chinese case.

The panel ruled that the U.S. had "acted inconsistently" in implementing the SCM agreement and unfairly cut India's trade revenue. Although the ruling told Washington to align its measures with the SCM pact, it failed to consider the technical aspects of the case itself.

U.S. Trade Representative Michael Froman praised the ruling but said it had "mixed result."

TagsWTO, Tariff, trade dispute