India objects to US review of its zero duty exports

NEW DELHI: New Delhi has complained to Washington that its decision to review the eligibility of $5.6 billion of Indian exports that get low or zero duty benefit in the US was “discriminatory, arbitrary and detrimental”.

In its response to the US, which was filed on Tuesday, India said the move “will cause irreparable damage to its exports”. ET has seen a copy of the response.

The submission, called a pre-hearing brief, was filed ahead of a high-level visit by commerce and industry minister Suresh Prabhu to the US next week.


The US had announced in April that it would review preferential or duty-free access to its market for India’s exports including mechanical and electrical machinery, organic and inorganic chemicals, plastics and vegetables as part of the Generalized System of Preferences (GSP) scheme. The review will impact almost 3,500 Indian products being exported to the US.

The US wants to review India’s eligibility based on petitions filed by its dairy and medical device industries “given Indian trade barriers affecting US exports in those sectors.”

GSP Programme
Although the US changed the qualifications norms for its GSP programme last year due to which a beneficiary country must meet 15 eligibility criteria established by the Congress, including equitable and reasonable market access, global norms governing the scheme state that developed countries should not expect developing countries to make matching offers in return for granting trade concessions. India has cited this non-discrimination, non-reciprocity clause of the programme to argue its case.

The scheme is not limited to the US. Developed countries including Canada, Australia and those in the European Union offer tariff preferences to developing countries but any beneficiary country with a per capita income that meets the World Bank definition of “high income” country is excluded from the programme.

India said this supported its case. As per the World Bank, a highincome country in 2017 was one which has an annual per capita gross national income (GNI) of $12,476 or above. India’s is only $6,490.6.

This is not the first case of a developed country seeking to discriminate between India and other beneficiary countries of the GSP.

In 2002, India had challenged the European Union’s GSP regime for seriously drug-affected countries arguing that it discriminated among developing countries. The WTO appellate body later ruled in India’s favour after it found that the EU’s GSP drug regime then was not based on objective and transparent criteria for the selection of the beneficiary countries.