indica News Bureau
In line with the protectionist approach to trade put in place by President Donald Trump, the US has withdrawn duty-free concessions on import of around 50 Indian products, mostly from the agriculture and handloom sectors.
The Indian products, among 90 items originating from various countries that had duty-free access in America under its Generalized System of Preferences (GSP), were removed from the GSP list effective November 1 by a US Presidential proclamation earlier this week.
“The President may withdraw, suspend or limit application of the duty-free treatment that is accorded to specified articles under the GSP when imported from designated beneficiary developing countries,” the proclamation said, citing the US Trade Act of 1974.
“I have determined to withdraw the application of the duty-free treatment accorded to a certain article,” the Trump proclamation said.
GSP is a preferential treatment that the US government gives to its exporters from developing and developed countries. The benefits under the GSP include duty free entry of certain goods like chemicals, gems, textiles among others to the US market.
The United States Trade Representative (USTR) had announced in April this year that it is reviewing the GSP eligibility of India, along with Indonesia and Kazakhstan. In 2017, India was the biggest beneficiary of the GSP with subsidies worth $5.6 billion.
The export of these products to the US will henceforth be subject to regular tariffs.
Indian products removed from the GSP include areca nuts, mangoes processed by vinegar or acetic acid, sandstone cut in slabs, whole buffalo skin leather, plain weave handloom cotton fabrics containing over 85 per cotton by weight, handloom carpets and textile floor coverings.
Products from other countries like Argentina, Brazil, Thailand, Pakistan, Turkey, the Philippines and Indonesia have also been removed from the GSP list.
The volume of India’s export to the US impacted by the latest move of the Trump administration is not known yet, but the list of products from which duty-free import provision has been removed reflects that a large number of small and medium size business could be impacted, in particular handloom and agricultural sector.
In April, the US announced eligibility review of India for the GSP. According to the USTR, the total US imports under GSP in 2017 was USD 21.2 billion, of which India was the biggest beneficiary with USD 5.6 billion, followed by Thailand (USD 4.2 billion) and Brazil (USD 2.5 billion).
The program has now been renewed through December 31, 2020.
In June, India urged the Trump administration not to withdraw it from the GSP.
Indian industry bodies like FICCI had submitted to the USTR that the termination of the GSP benefits would be contrary to the legislative objective and the history of the Trade Reform Act of 1974 of furthering the economic development of developing countries.
Of late, the trade relationship between India and the US has soured with Trump unilaterally raising tariffs on steel and aluminum imports from India and challenging its export subsidy regime at the World Trade Organization (WTO).
Apart from dragging US to the WTO on higher steel and aluminum tariffs, India has threatened to impose retaliatory tariffs worth $240mn on US imports.