Tariffs unjustifiably high, need level playing field: US Commerce Secretary

The US has indicated that it will not cut off India's duty-free access to its markets under GSP trade scheme until May 23

Pulling no punches, US Commerce Secretary Wilbur Ross on Tuesday repeatedly hit out at India for charging high tariffs on US products, implementing market access barriers, and having a difficult regulatory environment.

Ross, in India to discuss a long list of trade disputes between the two countries, lambasted “multiple practices and regulations that disadvantage foreign companies”. “Our strict Foreign Corrupt Practices Act assures the Indian government that our companies will not cause scandals here. But American companies need to operate in a transparent environment supported by the rule of law, and a level playing field,” he said.

Other obstacles included price controls on medical devices and pharmaceuticals, and restrictive tariffs on electronics and telecommunications products, Ross said.

US Ambassador to India Kenneth Juster said Ross met Prime Minister Narendra Modi in the morning, where he raised various issues. “The (Indian) government understands what our position is on trade issues,” Juster said.

The US has indicated that it will not cut off India’s duty-free access to its markets under the Generalised System of Preferences (GSP) trade scheme until May 23, according to sources. India is the largest beneficiary nation under the GSP scheme, having exported goods worth $5.6 billion to the US in 2017-18. 

Clash over tariffs

Ross said products such as motorcycles, technology goods and agri produce attracted zero tariffs in the US, but corresponding duties imposed by India were “unjustifiably high”. He was speaking at the US Trade Winds Indo-Pacific Business Forum and Mission initiative 2019, an export promotion programme aimed at bringing together businesses from both nations.

India countered the charges, pointing out current tariffs were well within the threshold allowed under the World Trade Organization (WTO) rules, and said other nations had protected their industries by imposing much higher tariffs. 

“India has average applied tariff rate of 13.8 per cent and that remains the highest of any major world economy. It has, for example, a 60 per cent tariff on automobiles, 50 per cent on motorcycles, and 150 per cent on alcoholic beverages. Its bound tariff rates, namely the highest rate they can charge, on agricultural products average an incredible 113.5 per cent, and some are as high as 300 per cent. These are not justified percentages,” Ross said.

Reiterating that the Trump administration continued to look at India as a major trade partner, Ross said India was the US' 13th largest export market due to overtly restrictive market access barriers. The US, on the other hand, is India's largest export market, accounting for 20 per cent of all shipments. The US has recently pushed aggressively to reduce its trade deficit with India, which stood at $ 21 billion in 2018.

Regulatory hurdles

Ross also touched upon American steel and aluminium tariffs, from which India has repeatedly sought a waiver. The move has been an attempt by Washington DC to force domestic and foreign steelmakers to shift back production to stateside and reduce imports. Ross said JSW Steel had announced plans to make an initial $250 million investment to acquire and upgrade a steel manufacturing plant in Ohio while expanding another plant in Texas with $ 500 million. "So anyone who doesn't think the tariffs work, this is three-quarters of a billion dollars of FDI proving that it works," he said.

The primary bilateral meeting on Monday focused on a plethora of US concerns on India's stringent position on data and e-commerce, among other issues. New Delhi has pushed domestic legislation on both issues and said no to global talks at the WTO on digital trade. But Washington DC has taken a strong stance against India's decision on server localisation, saying it lacked the necessary infrastructure, according to sources.