US' withdrawal of GSP benefits from India smells of lobbyist's hand

The withdrawal of the duty-free access scheme by the US, a day after Prime Minister Narendra Modi and the Council of Ministers took over for a second term, may have been owing to persuasion by the world’s largest medical device association, AdvaMed, which is lobbying for ending price controls by India, but “after elections”. 

In a letter to US Trade Representative (USTR) Robert Lighthizer, AdvaMed had suggested deferring the withdrawal of the benefits of the Generalised System of Preferences to India “until after the general elections are over and a new government is formed” to get a “favourable outcome” in trade negotiations over process controls.

Washington DC-based AdvaMed represents US pharma and technology majors including Abbott, Boston Scientific Corporation, Medtronic, BD, Pfizer, Apple and Microsoft. 

US President Donald Trump signed a proclamation on Friday, stating that the GSP scheme, which offered duty-free market access to more than 3,000 items exported from India, would be withdrawn on June 5. This was on account of the US government's belief that New Delhi was not providing equitable market access to American products.

While AdvaMed President and Chief Executive Officer A Scott Whitaker in the letter had lauded Trump for the “negotiation dynamic”, through GSP withdrawal, he had suggested postponing the decision till the elections in India were over. This could improve their chances of securing an acceptable solution from the new government. 

“...our intent in writing is to ask you to recommend to the President that he delay any final decision on GSP until after India's General Election. We believe that postponing a final decision on GSP... could provide our industry a better chance at securing an acceptable solution,” Whitaker wrote to Lighthizer.

He further wrote that “our assessment is based on signals from (the) Indian government that negotiations would soon resume thereafter, and our issue would be successfully resolved within a reasonably short time period”.

However, the new government did not get the time to hold negotiations, and hence the GSP withdrawal could be seen as an arm-twisting measure by the US, according to experts.

In a bid to make medical devices affordable, India had imposed process caps on coronary stents and knee implants in February and August 2017.

Trump notified the US Congress on March 4 his intention to withdraw GSP benefits for India. The 60-day notice period ended on May 3.

India's seven-phase elections ended on May 19, and the new government was formed on May 30.

The Indian government called the move “unfortunate” and hinted at further talks on the matter.

“We view this issue as part of this regular process and will continue to build on our strong ties with the US, both economic and people to people,” the commerce ministry said in a release.

Piyush Goyal is the new minister in charge of commerce and industry in the new government.

Even India has extended the deadline to impose retaliatory import tariffs on 29 US products by a month till June 16.

India announced retaliatory tariffs of $230 million on about 29 American goods in June last year in response to imposing penal tariffs of 25 per cent on steel and 10 per cent on aluminium from the country by the US.

"We appreciate the US Government’s (USG) efforts to advocate for greater market access for US research-based medical device companies in India,” said AdvaMed in response to Business Standard's queries on GSP withdrawal.