US trade preference program enhances pace of economic reforms, says India

Washington: India on Tuesday told the Trump administration that the Generalized System of Preference program (GSP) would enhance India's development and the pace of economic reforms, urging it not to withdraw the south Asian country from the US' trade preference programme.

"India, being a beneficiary developing country, the GSP benefits are integral and geared to enhance its development and the pace of economic reforms," Puneet Roy Kundal, Minister Commerce at the Indian Embassy in Washington DC, told members of USTR's GSP Subcommittee of the Trade Policy Staff Committee.

The US' Generalized System of Preferences program provides for the preferential treatment of designated articles when imported from beneficiary developing countries.

A self-initiated review by the USTR focuses on whether India is meeting the US criteria for a GSP beneficiary country, and particularly whether India provides "equitable and reasonable" market access to products from the US.

The products on which India receives GSP benefits belong to sectors which employ thousands of men and women, especially in the rural areas through micro, small and medium enterprises, the senior Indian diplomat told the committee.

Kundal urged the USTR to retain the GSP beneficiary status to India.

"Picking out India along with a few GSP benefiting countries, for potential withdrawal of tariff preferences on the ground that India does not provide the US 'equitable and reasonable access' to its market would be inconsistent with the non-discrimination and non-reciprocal obligations under Enabling Clause," he said.

Noting that a predominant share of the GSP beneficiary items exported from India are intermediaries and semi-manufactured goods, Kundal said the provision of GSP benefits to these products enables availability of cost effective and price competitive inputs to the US downstream industry.

"This is helping the US industries to maintain their domestic and export competitiveness," he argued.

Kundal said the rules governing the GSP under the WTO contained in the 1979 Decision on Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries (Enabling Clause) envisage non-discriminatory and non-reciprocal grant of tariff benefits.

The USTR has accepted 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 India's alleged trade barriers affecting the US exports in these sectors.

"In respect of export of dairy products from the US to India, the issue is not of market access but certification given high religious, cultural and moral sensitivities. India provides unimpeded market access to dairy products from all countries, and there are exports of these products into India," Kundal said.

He said India was a progressive nation and envisages that its citizens are provided with equitable and affordable access to essential medicines and medical devices.

The emphasis is on providing good quality, affordable and comprehensive healthcare to all the citizens. These values have also been enshrined in the National Health Policy, 2017, he added.

Kundal denied that India has undertaken any "unnecessary or discriminatory" measures or steps to reduce access of US medical devices industry to the Indian market.

"Nevertheless, to address the concerns of the stakeholders, the government think-tank NITI Aayog placed a concept note on trade margin rationalisation model for public comments and which ultimately would address the concerns," he told the USTR's GSP subcommittee.

Review of the tariff preferences accorded under the criteria set out in Section 502(c)(4) of the Trade Act and any consequent action thereof would create irreparable damage for India's exports to the US and such an action will also be contrary to the objective enshrined in Section 501 of the Trade Act of 1974 and enabling provisions of the WTO, Kundal said in his oral submission.

In his testimony, he argued that "dilution of GSP benefits to India would be discriminatory, arbitrary and detrimental to the development, finance and trade needs of India - a vast and diverse developing country with unique challenges".