Will end preferential trade with India: US | World News - Hindustan Times
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Will end preferential trade with India: US

Hindustan Times, Washington/New Delhi | ByYashwant Raj and Rajeev Jayaswal
Mar 05, 2019 11:04 PM IST

The US government has notified its intent to remove India from its zero-import duty programme, the Generalised System of Preferences (GSP), after a 60-day notice, though India said on Tuesday the matter can be resolved amicably through discussions.

The US government has notified its intent to remove India from its zero-import duty programme, the Generalised System of Preferences (GSP), after a 60-day notice, though India said on Tuesday the matter can be resolved amicably through discussions.

US President Donald Trump (R) greets Indian Prime Minister Narendra Modi during their joint news conference in the Rose Garden of the White House in Washington, U.S., June 26, 2017.(REUTERS FILE PHOTO)
US President Donald Trump (R) greets Indian Prime Minister Narendra Modi during their joint news conference in the Rose Garden of the White House in Washington, U.S., June 26, 2017.(REUTERS FILE PHOTO)

The Trump administration has been pushing for greater access to Indian markets for dairy products and medical equipment.

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“India’s termination from GSP follows its failure to provide the US with assurances that it will provide equitable and reasonable access to its markets in numerous sectors,” said a statement issued by the office of the United States Trade Representative (USTR).

An external affairs ministry official, who did not want to be identified, said: “As far as the USTR is concerned, all that flexibility we [India] showed did not meet their [the US] requirements. So they have invoked the 60-day notice for GSP.”

According to US law, the proposed changes cannot take effect until 60 days after the notification to the Congress and the government of India.

It will be finally enacted by a presidential proclamation after the notice period.

Commenting on USTR’s statement that India implemented “a wide array of trade barriers” against US interests and that it failed to take steps to meet the GSP criterion “despite intensive engagement”, the official expressed confidence the matter would be resolved amicably.

“Our view is that we are still in discussion and we will continue to talk to them. We would like to see that we can reach an agreement,” the official said.

Commerce secretary Anup Wadhawan said India will not impose any retaliatory tariffs on imports from the US as the withdrawal of GSP for Indian products will have “limited” impact. “Discussions are on with the US, and given cordial and strong ties, [India is] keeping retaliatory tariffs out of it,” he said.

The actual benefit from preferential treatment is of $190 million since India used the concession for only 1,784 products out of 3,700 covered, he said.

HT reported on February 12 about the impending action by USTR. The US imported goods worth $5.6 billion from India in 2017 under the programme aimed at helping developing economies.

This was more than 10% of the total Indian goods imported by the US in 2017. The US had announced a review of India’s continued eligibility for the programme in April 2018, citing market access concerns, specifically for dairy products and medical devices.

“There were a number of areas we were willing to show flexibility, a number of agricultural products of the US that we were willing to allow for imports,” the external affairs ministry official quoted above said.

India has concerns related to “genuine cultural sensitivities”, specifically for dairy products because of animal feed being used for cows in the US.

“There too, we were willing to see how we could arrive at a mutually acceptable arrangement which preserved our cultural sensitivities and allowed dairy products from the US to come into the markets,” the official said.

“The other areas of concern are in the IT space where we had some concerns that if we simply let down our guard, the benefits in the $20 billion market would go not to the US [but to another country], because the amount of [IT sector] imports from the US is less than half a billion dollars,” the official said.

The official said India had made a friendly gesture by not imposing retaliatory tariffs on steel and aluminium.

India has been the top beneficiary of the GSP programme that extends a zero-tariff regime for some goods, not all, to 120 countries.

Indian exporters said the US move will have a marginal impact on their businesses, particularly exports of processed food, leather, plastic and engineering goods.

“The government should look into providing fiscal support to such sectors so that exporters reduce their export prices factoring in the fiscal support with a view that the landed price of such products remains more or less what was under the GSP regime,” Federation of Indian Export Organisations (FIEO) president Ganesh Kumar Gupta said.

Ficci president Sandip Somany said; “I am sure the government would take appropriate action and there will be dialogue between the two governments to make sure that this is not withdrawn in case of India.”

The US decision was along expected lines but New Delhi was disappointed and irritated. “We had conceded most of their demands and had indicated our readiness to discuss the few remaining ones as well,” an official close to the negotiations said, adding, “but they seemed to be in the mood to go for all.”

US experts and observers of relations with India were disappointed as well because of the administration’s failure to see the trade issue in the context of its own national security strategy objectives for Asia, with the threat from China a shared objective.

Milan Vaishnav, a South Asia expert at Carnegie, described the delisting as a “very shortsighted decision by the Trump administration”.

(With inputs from Rezaul H Laskar)

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