US withdraws duty benefits on Indian exports worth $75 Million

Source: The Economic Times, Nov 02, 2018

Indian exports of certain musical instruments, leather, textiles, dairy, chemicals and processed fruits and vegetables to the US will no longer enjoy duty-free access, with the Trump administration withdrawing such concessions effective November 1.

The annual exports of these items to the US is estimated at about $75 million.

“…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,” US President Donald Trump said in a presidential directive dated October 30.

Other countries that have had duty concessions withdrawn by the US include Thailand, Argentina, Pakistan, Turkey, the Philippines, Brazil, Suriname, Belize, Ecuador, Falkland Islands, Kazakhstan, Egypt and Bosnia and Herzegovina.

However, the number of Indian products affected, at 50, is the highest. The benefits are given to developing countries under the Generalized System of Preferences. India, which gets $5.6 billion duty concessions through the programme, is the largest beneficiary. Total US imports under GSP in 2017 were worth $21.2 billion.

However, officials and experts said this is an annual exercise that is not aimed at any particular country.

“They review products every year, as per their law. This is a product-specific step, not country-specific,” said an official aware of the move.

The US said in April it would review preferential or dutyfree access to its market for India’s exports including mechanical and electrical machinery, organic and inorganic chemicals, plastics and vegetables. The review will impact almost 3,500 Indian products exported to the US.

“There is a review of the limit every year because GSP is not reciprocal and the US does not get anything in return,” said a trade expert.

The competitive-need limitations are built-in import ceilings to curb duty-free access to the US market for products and countries that might not otherwise be “competitive.” The GSP statutes require termination of GSP benefits for products if they account for 50% or more of the value of total US imports of that product or exceed a certain dollar value. This value was $145 million in 2010 and increased by $5 million per year.

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