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US withdraws duty benefits to Indian jewellery exports

business Updated: Jun 29, 2007 20:49 IST
Gaurav Choudhury

Export of Indian gold jewellery and brass lamps to the US will now attract import tariffs, after Washington on Thursday terminated trade benefits offered under the generalised system of preferences (GSP) to these items.

Commerce and Industry Minister Kamal Nath was quoted in Washington as saying, “We will take note if and when the moment comes. We will remember it was not extended”.

The US move came barely a week after negotiations on the stalled Doha round of World Trade Organisation (WTO) reached a deadlock in Potsdam in Germany as trade ministers of India, Brazil, the US and the EU failed to hammer out a consensus on the contentious issue of farm subsidies.

India exported gold jewellery worth $1.6 billion and brass lamps worth $20 million to the US under the GSP programme during the first 10 months of 2006.

The review also withdrew the GSP benefits offered to the export of ship brakes, brake parts and ferrozirconium to the US markets. Brazil had exported brake and brake parts worth $242 million and $700,000 worth of ferrozirconium during 2006 to the US.

The GSP statute includes two “competitive need limitations” on the eligibility of a product for benefits: if the annual trade of a product from a specific country exceeds a value-based threshold ($125 million in 2006); or if the annual trade of a product from a specific country exceeds 50 per cent of total US imports of that product.

“The statute indicates that well-established, globally competitive industries based in developing countries should compete on a level playing field with their counterparts,” a US Trade Representative (USTR) statement said.

Imports that exceeded the new statutory threshold in 2006 established by Congress and that have been removed from GSP eligibility are: kola nuts from Ivory Coast; wiring harnesses from the Philippines; gold jewellery from Thailand; and methanol from Venezuela, apart from the list of items from India and Brazil.

US Commerce Secretary Carlos M. Gutierrez said in Washington on Thursday that Indian consumers were paying the price for the Indian government’s trade import restrictions. “Ultimately, Indian consumers pay the price. This year the Indian government will pay tens of millions of dollars more because of these barriers on American wheat imports. This is a concrete example of the cost of trade restrictions,” Gutierrez said.