The Bush administration has asked for public comments on a proposal to limit, suspend or withdraw trade preferences to India and a dozen other countries as part of a major review ordered after the collapse of world trade talks.
US Trade Representative Susan Schwab does not link the review to the stand taken by India and other advanced developing countries at the world trade talks. She suggests it is only part of a broader examination ordered in 2005 with a view of distributing benefits of Generalized System of Preferences (GSP) more equally.
However, some members of US Congress are reported to have complained that certain countries that benefit most from the US programme have not been helpful in the WTO talks and therefore should not receive the GSP benefits in the future.
Senate Finance Committee Chairman Charles Grassley, whose committee would have jurisdiction over any legislation to extend the GSP programme, for one has been doing some plain speaking since the collapse of the WTO negotiations.
"Why should we continue to give preferential treatment to countries that don't want to give us access to their markets in the WTO negotiations?" he asked at a committee meeting in July.
Announcing the review Monday, Schwab herself said, "One of the concerns that Congress has raised is that GSP benefits go largely to a few countries, while many developing countries are not trading much under the programme."
She said the programme should be continued and broadened even if benefits for some of the more-developed countries are limited or withdrawn. "Our goal is for more countries to benefit from the programme and use trade in support of their economic development," She said.
Schwab's office has set a deadline of Sep. 5, 2006 for comments on proposed action against India and 12 other countries whose exports to the US covered by the GSP exceeded $100 million in 2005 and meet one of the two additional criteria.
A public notice Tuesday in the Federal Register set these criteria as that the country was classified as an upper-middle-income economy by the World Bank in 2005, or that its total exports equalled at least one quarter of one percent of all global exports in the same year.
Besides India other countries that meet those criteria are Argentina, Brazil, Croatia, Indonesia, Kazakhstan, Philippines, Romania, Russia, South Africa, Thailand, Turkey and Venezuela, it said.
Altogether, 133 countries covered by the US programme exported $26.7 billion worth of goods to the US market duty free in 2005 under the GSP, with India ($4.2 billion), Brazil ($3.6 billion), Thailand ($3.6 billion) and Indonesia ($1.6 billion) among its top beneficiaries, according to USTR.
The review, intended to shift preferential treatment from more advanced developing countries to a larger number of less-developed countries, will also examine whether to withdraw presidential waivers that give these 13 countries and six others unlimited duty-free access for certain products.
Products from India listed under these Competitive Need Limitations (CNL) waivers include: gold mixed link necklaces and neck chains; articles of precious metal jewellery; copper, table, kitchen or other household articles coated or plated with precious metals; non-electrical incandescent lamps and lighting fixtures.
Under the GSP, a trade scheme established in 1968 by a UN conference, developed countries grant reduced or zero tariff rates to selected imports from developing countries.
The least developed countries receive trade benefits for more products and deeper tariff cuts.
The US GSP programme was established in 1976 and has been renewed eight times, most recently in 2002. It expires at the end of 2006, and Congress must renew it for benefits to continue.