Trump Kicks Out India from GSP
By Indica News Bureau
WASHINGTON, March 07, 2019 – The United States dairy industry welcomed President Donald Trump’s decision to terminate India’s inclusion in the Generalized System of Preferences (GSP), which provides some exemptions from World Trade Organization rules.
According to a press release, the industry has worked with the US government for years to reach a mutually beneficial resolution with the Indian government but India has denied market access to US dairy products.
When indica approached the US Dairy Export Council on the reason why they petitioned against India, the council sent a press note which carries comments from the National Milk Producers Federation and US Dairy Export Council stating, “We would like to urge the United States Trade Representative (USTR) to modify the GSP status of India because of its practice of erecting trade barriers to US exports and of failing to provide ‘equitable and reasonable access to its market,’ as is required under the GSP.”
Up to $100 Million in Additional US Export Revenue at Stake
Resolution of this issue is estimated to ensure additional US exports, ranging from $30 million to $100 million as the US dairy industry establishes itself in the market, it said.
Welcoming the decision, Tom Vilsack, chairman and CEO of the US Dairy Export Council, said through a press statement, “The US dairy industry strongly welcomes this enforcement action by USTR and hopes that it sets the precedent that unfair trade practices will not be tolerated, and compliance enforcement measures will be utilized when warranted.”
The release asserted that since 2003 India has received preferential access to the US market under the special duty-free trade arrangement called GSP, and over the years has cited a variety of shifting reasons for its trade barriers, including unscientific restrictions on US livestock feeding practices.
“For 16 years India has enjoyed unilateral access to US markets while flaunting their obligation to provide fair market access mandated under the GSP program, and harming American dairy farmers in the process,” said Jim Mulhern, National Milk Producers Federation (NMPF) president and CEO. “The administration has sent a clear message: abide by free and fair trade practices or face the consequences.”
But India’s Ministry of Commerce and Industry said that its certification requirement that the animal providing the dairy product should never have been fed animal-derived blood meal is non-negotiable, given cultural and religious sentiments in India.
The simplified dairy certification procedure requested could be considered, without diluting this requirement, it said, while conveying its willingness to provide market access related to products like alfalfa hay, cherries and pork.
On March 4, Trump announced his intention to terminate India from the developing countries benefiting from the GSP, claiming it no longer complied with the statutory eligibility criteria. He has given India a 60-day withdrawal notice on the GSP benefits.
“India has set up many trade barriers that hamper US commerce”
According to a US Trade Representative press note, an eligibility review of India’s compliance with the GSP market access criterion was launched in April 2018. It found that India has set up many trade barriers that hamper US commerce and that intensive engagement had not resulted in India taking the necessary steps to meet the GSP criterion.
India’s Ministry of Commerce & Industry has responded that since the review was initiated the two countries have been discussing solutions for various bilateral trade issues. India stands to lose $190 million per annum if the GSP concessions are removed.
The US had initiated the review based on representations from the medical equipment and dairy industries but subsequently included other issues, including market access for agriculture and animal husbandry products, relaxation or easing of procedures related to the telecom industry and tariff reduction on other products.
While Commerce Department discussions with various Indian ministries resulted in solutions on most US requests, a few problems remained insoluble.
India ready to address US concerns regarding medical devices
India said it was ready to address US concerns regarding medical devices in principle, by putting in place a suitable trade margin approach in a reasonable time frame to balance concerns about fair pricing for consumers and adequate earnings for the suppliers.
On the reduction of IT duties, it said, India’s duties are moderate and do not stop imports with any most favored nation duty reduction almost entirely benefiting third countries. India had conveyed a willingness to extend duty concessions on specific items in which there is a clear US interest, it said.
On telecom testing, India said it was willing to consider discussions for a Mutual Recognition Agreement.
Due to various initiatives resulting in the enhanced purchase of US goods like oil and natural gas and coal the US trade deficit with India has substantially reduced in 2017 and 2018, it said. It added that the reduction is estimated to be over $4 billion in 2018, with further reduction expected in future due to factors like the growing demand for energy and for civilian aircraft in India.
The issue of Indian tariffs being high has been raised from time to time though it was on average above rates under WTO commitments at 7.6 percent, comparable with the most open developing economies and some developed economies, it said, adding that a few tariff peaks were likely on developmental considerations, as happens in almost all economies.