50 Indian items face heat as US revokes duty-free privileges on import of 90 products

Washington: The US on Thursday revoked duty-free concessions on import of at least 50 Indian products, mostly from handloom and agriculture sectors, reflecting the Trump administration’s tough stand on trade-related issues with New Delhi.

The federal register issued a notification, listing out 90 products which were so far subject to duty-free provisions under the Generalized System of Preferences (GSP). President Donald Trump issued a presidential proclamation on Tuesday, leading to the removal of these products from the privilege beginning November 1.

As of November 1, these products “will no longer qualify for duty-free preferences under the GSP programme but may continue to be imported subject to regular Most Favoured Nation duty-rates,” an official of US Trade Representative told PTI.

A review of the products indicates that the presidential proclamation is not country specific, but product specific. With India being the largest beneficiary of the GSP, it has been hit the most by the latest decision of the Trump administration.

The GSP, the largest and oldest US trade preference programme, is designed to promote economic development by allowing duty-free entry for thousands of products from designated beneficiary countries. A count of these products indicated that at least 50 of them are from India. Notably India is the largest beneficiary of the GSP. In 2017, India’s duty-free export to the US under the GSP was to the tune of more than USD 5.6 billion.

The volume of India’s export to the US impacted by the latest move of the Trump administration is not known yet, but the list of products from which duty-free import provision has been removed reflects that a large number of small and medium size business could be impacted, in particular handloom and agricultural sector.

In his presidential proclamation, Trump said that certain “waivers will no longer be granted for any product, regardless of the country source, that exceeds the GSP” Competitive Need Limitation (CNL) thresholds. The CNL thresholds are quantitative ceilings on GSP benefits for each product and designated beneficiary country. Trump said he had determined in 2017 certain beneficiary developing countries exported eligible articles in quantities exceeding the applicable competitive-need limitations.

“I hereby terminate the duty-free treatment for such articles from such beneficiary developing countries,” he said. Products from other countries like Argentina, Brazil, Thailand, Suriname, Pakistan, Turkey, the Philippines, Ecuador and Indonesia have also been removed from the GSP list.

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.

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.

In April, the US announced eligibility review of India for the GSP. According to the USTR, the total US imports under GSP in 2017 was USD 21.2 billion, of which India was the biggest beneficiary with USD 5.6 billion, followed by Thailand (USD 4.2 billion) and Brazil (USD 2.5 billion).

The programme has now been renewed through December 31, 2020. FICCI in a submission to the USTR had said that the termination of the GSP would be contrary to the legislative objective and the history of the Trade Reform Act of 1974 of furthering the economic development of developing countries.

It would cause significant distress to the export-oriented sector leading to increased cost for US industries that use products under the GSP, it said. In June, India urged the Trump administration not to withdraw it from the GSP.