India, US and the impending GSP axe
The US trade representative’s office is reported to be close to notifying Congress its intention to either remove India from the list of countries that benefit from a zero-tariff system for imports, Generalized System of Preferences, or suspend its benefits over continuing differences on trade issues.
A 60-day notice to the US Congress is being prepared to convey USTR’s intention to remove India from the programme or reduce the number of goods covered, Politico reported on Monday.
This goes beyond a Reuters report last week that a decision is expected in two weeks.
There has been no official announcement yet of any kind and a response is awaited from both the USTR and the department of commerce to a request for confirmation or denial of the report.
The United States imported $5.6 billion worth of goods from India in 2017 under this programme aimed at helping developing economies. This is more than 10% of total Indian goods United Stated imported in 2017.
The United States announced a review of India’s continued eligibility for the programme in April 2018 citing market access concerns, citing specifically dairy and medical devices.
Multiple rounds of talks have taken place since between Indian and US trade officials to address them and other issues hat arisen from President Donald Trump’s tariffs on steel and aluminium imports. Developments on e-commerce and data localization have been added to the discussions.
President Trump has also weighed personally to press India to reduce tariffs, picking on Harley-Davidson motorcycles and Bourbons — both relatively insignificant US exports to India, worth $1.17 million and $5.7 million respectively.
The GSP review, and the decision to remove India from GSP, could come up in discussions with US commerce secretary Wilbur Ross during his visit to New Delhi this wee, even though his department is not conducting the review (the USTR is).
Indian officials familiar with the GSP discussions have long acknowledged that the hawkish leadership of the USTR has been keen to remove India from the programme and took out $70 million worth of Indian goods imported under the programme last November. But it had been prevented from going the whole way by a lack of administration-wide consensus.
Indian officials have also sought to convey to the United States their inability advance the discussions in a productive way in view of the upcoming elections. “They might also like to start afresh with the next government, of whichever party,” an official said n New Delhi, adding, there is precedence.
Defying pressure from powerful trade bodies such as the US chamber of commerce, the USTR had postponed drastic trade action against India in April 2014 — a “Priority Foreign Country” — so as to “engage the new government (expected shortly) and find a way forward on these issues”. The Modi government took office in May.