NOTE: The following report appears in both International Trade Today and Export Compliance Daily.

Commerce Secretary Chides India for Trade Deficit

May 8, 2019 |Asia Pacific

Commerce Secretary Wilbur Ross, speaking May 7 in New Delhi, chided India for its high tariffs and non-tariff barriers, blaming them for the trade deficit with the U.S. He did not acknowledge the termination of the Generalized System of Preferences benefits for India. Although the administration warned India could be terminated from the GSP program as of May 4, so far, that has not happened. However, Ross did tell a local TV station, according to Reuters, that retaliation for the end of GSP would be inappropriate.

Ross, who was speaking at a trade fair, said, "India has the world’s third-largest economy, and by 2030, it is expected to become the world’s largest consumer market because of the rapid growth of the middle class. Yet, today, it is only our 13th largest export market, due to overly restrictive market access barriers. Meanwhile, the United States is India’s largest export market. There is a real imbalance!"

He noted that U.S. goods exports to India increased 20 percent last year, by $7.4 billion, but said India's exports to the U.S. increased $54 billion. "India’s average applied tariff rate of 13.8 percent remains the highest of any major world economy. It has a 60 percent tariff on automobiles; 50 percent on motorcycles; and 150 percent on alcoholic beverages," he said. "Other obstacles include price controls on medical devices and pharmaceuticals, and restrictive tariffs on electronics and telecommunications products. Tariffs for network routers and switches and parts of cellular phones are as high as 20 percent." In contrast, Ross said, "the U.S. rate for these same products exported from India to the United States is zero. These high tariffs undermine India’s goal of improving digital access and digital literacy."

"We applaud India’s commitment to addressing some of these barriers," Ross said, saying he hopes India will buy more military hardware from the U.S., given that more products are now available to it without an export license, and that could lower the trade deficit.