US moves to suspend or cut tariff preferences for India

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 or suspend its benefits over continuing differences on trade issues.

A 60-day notice to the Congress is being prepared to convey USTR’s intention to remove India from the Generalized System of Preferences (GSP) or reduced the number of goods covered, Politico reported on Monday. Media reports had said earlier 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 US 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 US imported in 2017.

The US announced a review of India’s continued eligibility for the programme in April 2018, citing market access concerns, specifically for dairy and medical devices. Multiple rounds of talks between Indian and US trade officials were held to address them and other issues that arose from President Donald Trump’s tariffs on steel and aluminium imports. Developments on e-commerce and data localisation have been added to the discussions.

Trump has weighed in 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 mn 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 week, even though his department is not conducting the review.

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.