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US strikes at Indian exports, impact small

GSP duty-free status for 50 products revoked, SMEs stand to lose
Of the 90 items revoked by the US, the country would be impacted in about 50 items as India was the largest beneficiary under the GSP.
Of the 90 items revoked by the US, the country would be impacted in about 50 items as India was the largest beneficiary under the GSP.
(Shutterstock)

R. Suryamurthy   |   New Delhi   |   Published 01.11.18, 07:51 PM

The US on Thursday revoked duty-free concessions on the import of at least 50 Indian products, mostly from the handloom and agriculture sectors.

Experts, however, averred the move would impact exports worth only about $72.3 million. This is out of a total of 2,000 GSP-enabled products worth about $5.6 billion shipped to the US annually, according to commerce ministry officials.

The GSP programme provides for the duty-free treatment of designated articles when imported from beneficiary developing countries to America. The federal register has issued a notification, listing out 90 products which were so far subject to duty-free provisions under the Generalized System of Preferences (GSP).

A review of the products indicates that the move is not country specific, but product specific.

Commerce ministry officials said the Washington has “not taken any unilateral action, but through a regular review process” .

Of the 90 items revoked by the US, the country would be impacted in about 50 items as India was the largest beneficiary under the GSP.

While the US has revoked duty free benefits under the Generalised System of Preferences (GSP) to some Indian products, New Delhi has for the third time deferred the imposition of its retaliatory tariff on 29 American products till December 17.

According to trade data, India imported goods and services valued at $49.4 billion and exported goods worth $76.7 billion to the US. The US trade deficit with India was $27.3 billion in 2017.

“As far as the country is concerned, the US move would have little impact on exports. However, it would have a significant impact on small and medium exporters, who were getting a competitive advantage because of GSP,” Ajay Sahai, director general of FIEO, said.

“Small exporters are definitely affected in price-sensitive sectors. Even a difference of 4-5 per cent makes a lot of difference in sectors such as carpets, chemicals and some engineering sectors,” he said.

India could lose US market share to rivals such as Vietnam and Bangladesh, which have duty-free access, trade experts said. They said the country cannot move to the World Trade Organization as these are voluntary in nature and had been provided by the US on its own.

The Trump administration had been demanding a more open market for US agriculture products, automobiles and capping of prices for medical devices among others. In April, the US announced eligibility review of India for the GSP to gain more market access. However, India had made it clear that the GSP benefits should be unconditional and not contingent upon reciprocal market access for goods, services or other trade.

Some of the prominent Indian products removed from the duty-free provisions of the GSP include dried pigeon pea seed; areca nuts, fresh or dried, in shell; turpentine gum; mangoes, prepared or preserved by vinegar or acetic acid; sandstone, merely cut into blocks or slabs of a rectangular (including square) shape; tin chlorides; barium chlorides; salts and esters of tartaric acid, nesoi; and trimethyl phosphite.

These products can still be exported to the US from India but they will be subject to regular tariffs.

Meanwhile, India on Thursday said it was engaged with the US, Iran and other stakeholders on the issue of American sanctions on import of Iranian oil, amid indications that the Trump administration may grant New Delhi waiver from punitive measures.

Benefits offered by the US to the developing countries under the GSP scheme are non-reciprocal. However, the US can withhold GSP benefits to a trading partner if it finds that its exports are facing market access hurdles in that country.

Full grain unsplit or grain split buffalo hide or skin; grain split whole buffalo leather, without hair on; whole buffalo skin leather (not full grain unsplits/grain splits); and full grain unsplit buffalo leather (not whole) have also been removed from the duty free the GSP list.

Dyed, plain weave certified hand-loomed fabrics of cotton, containing 85 per cent or more cotton by weight; plain weave certified hand-loomed fabrics of cotton, containing 85 per cent or more cotton by weight, hand-loomed carpet and other textile floor coverings, not of pile construction, woven, made up of man-made textile materials have also been removed.

Base metal clad with gold mixed link necklaces and neck chains and keyboard musical instruments, like harmoniums and similar keyboard instruments with free metal reeds are among the other products.

These products can still be exported to the US from India but they will be subject to regular tariffs. Benefits offered by the US to the developing countries under the GSP scheme are non-reciprocal. However, the US can withhold GSP benefits to a trading partner if it finds that its exports are facing market access hurdles in that country.

Meanwhile, India has further delayed the implementation of tariffs on 29 US products worth $235 million intended to counter a US move to unilaterally raise import duties on Indian steel and aluminium products till 17 December. This is the third time retaliatory action against US import tariffs has been delayed.



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