Future of India's Participation in GSP in Question

If any of the countries under review in the Generalized Systems of Preferences are going to lose access to the program, India is the most likely, according to a trade advocate who works on GSP. The advocate spoke to International Trade Today after speaking with staff who handle GSP at the Office of the U.S. Trade Representative, and said he does not know if India will have some products removed, be suspended, or, like Russia, "graduate" from the program because the U.S. says it has developed enough.

Reuters reporters, citing unnamed sources, wrote that the USTR is ready to bar India from the program, and will make a decision within two weeks. Commerce Secretary Wilbur Ross is going to India Feb. 14.

The trade advocate said he doesn't think any decision on India, Thailand, Indonesia or Kazakhstan will come before March, but acknowledged that in this administration, a tweet some morning could change everything.

USTR, which announced the review of three countries in April 2018, had mentioned India's pricing controls on knee replacements and stents as a trade irritant in its annual trade report (see 1803300022). The medical device interest group and dairy exporters have been asking for India's removal from GSP since October 2017 (see 1710190022). India is the top beneficiary of GSP, accounting for $5.6 billion of the program's $21.1 billion in imports last year, according to USTR. Almost 12 percent of India's exports to the U.S. are covered by GSP.

Shawna Morris, from the U.S. Dairy Exporters Council, said her group has tried to work with India for 14 years on ways to be able to sell American dairy in their country. "In 2003, following an increase in dairy imports from the U.S. and other countries, India abruptly changed its requirements for the government-issued dairy health certificates that must accompany diary imports destined for the Indian market. The United States Government and U.S. industry have extensively engaged with India since that time to address its requirements, only for the focus of demands to shift each time resolution appeared to be within reach," she wrote in her submission on the GSP review. She noted that India says it cannot accept American dairy for religious reasons because some American cows eat bovine tallow or blood, and also are fed pork and chicken protein. Morris said her group has suggested the American dairy be labeled as non-vegetarian, but that has not been accepted.

The trade advocate said how far the administration goes "depends on what the end game is." He said if the administration aims to convince India to open its market more to dairy exports, or change its pricing rules on knee replacements and stents, maybe it would just remove the top five Indian exports from the GSP list. But if it just wants to be punitive, it could either suspend India -- as Bangladesh was suspended after a garment factory collapse killed 1,100 workers -- or graduate it from the program, he said.