US Announces Review of Trade Preferences With India

Washington: Based on the market access concerns it has with India, the US on Thursday announced eligibility review of India for the Generalized System of Preferences (GSP).

Simultaneously, the US also announced eligibility review of other two countries — Indonesia and Kazakhstan, which it said was based on concerns about the countries' compliance with the programme.

The GSP is the largest and oldest US trade preference programme and is designed to promote economic development by allowing duty-free entry for thousands of products from designated beneficiary countries. Congress last month had voted to renew the GSP through 2020.

For India, the GSP country eligibility review is based on concerns related to its compliance with the GSP market access criterion, said the US Trade Representative (USTR).

For Indonesia, the review is based on concerns related to its compliance with the GSP market access criterion and the GSP services and investment criterion. Kazakhstan's eligibility review is based on concerns related to its compliance with the GSP worker rights criterion.

The USTR said the reviews are based on Trump administration's new GSP country eligibility assessment process as well as GSP country eligibility petitions.

"GSP provides an important tool to help enforce the Trump administration's key principles of free and fair trade across the globe. The President is committed to ensure that those countries who receive GSP benefits uphold their end of the bargain by continuing to meet the eligibility criteria outlined by Congress," said Deputy US Trade Representative Jeffrey Gerrish.

"We hope that India, Indonesia, and Kazakhstan will work with us to address the concerns that led to these new reviews, he said.

The USTR said it is launching a self-initiated GSP eligibility review of India based on concerns related to its compliance with the GSP market access criterion and is also accepting two petitions related to the same criterion.

The petitions filed by the US dairy industry and the US medical device industry requested a review of India's GSP benefits, given Indian trade barriers affecting the US exports in those sectors.

India has implemented a wide array of trade barriers that create serious negative effects on US commerce, the USTR alleged.

The acceptance of these petitions and the GSP self-initiated review will result in one overall review of India's compliance with the GSP market access criterion. Introduced in 1976, a wide range of industrial and agricultural products originating from certain developing countries are given preferential access to American markets.

In India's case, it enables duty-free entry of 3,500 product lines, which benefits exporters of textiles, engineering, gems and jeweller and chemical products.

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 (USD4.2 billion) and Brazil (USD 2.5 billion).

The programme has now been renewed through December 31, 2020. While legislation to renew the GSP was enacted on March 23rd, the effective date of renewal is April 22, 2018. GSP-eligible entries will enter the US duty-free on, and after, April 22, 2018.

The USTR said the next GSP assessment process will start in the fall of 2018 and will cover beneficiary countries in Eastern Europe, the Middle East and North Africa and the Western Hemisphere.