US Congress trains guns on special tariff for Indian goods

NEW DELHI: After the passing of the Indo-US civilian nuclear bill, the government is carefully watching the US Congress schedule to see if a bill dealing with a review of preferential tariffs comes up in the lame duck session of the Congress, which reconvenes in the first week of December.

India gets preferential tariff on a number of goods exported to the US under the Generalised System of Preferences (GSP) scheme, which expires next month. The Congress has been dragging its feet on the issue for the past few months and the sticking point is a proposal, supported by key legislators, to reduce benefits to India and Brazil under the scheme. The provocation was India’s refusal to allow greater market access to US products under the WTO.

The PMO, on a request from the commerce ministry, had asked the Ministry of External Affairs to engage lobbyists in Washington to push for India’s case for continuing preferential tariff for export goods to India. An MEA official said that India had taken up the issue with the US embassy here, with legislators in the Senate and House of Representatives in Washington, and had also been pursuing the matter with the Bush administration.

Even If the Congress doesn’t review the GSP Scheme — which was set up in 1976 and last renewed in 2002 — by December, then India, along with the other countries in the scheme, would lose the benefits anyway at the end of the year.

Senate finance committee chairman Charles Grassley had threatened to let the programme expire if India and Brazil continue to get preferential tariff, while US House of Representatives Ways and Means Committee chairman Bill Thomas proposed that the scheme should be renewed with reduced benefits for India and Brazil. The official said that India could be banned in certain categories where it doesn’t meet the requirements.

This move is also being seen as a retaliatory measure for India’s refusal to allow greater market access for US agriculture and manufactured products and the failure of the WTO round of talks. Members of Congress have argued that benefits should be reduced on this count and the scheme extended to other less advanced countries.