The US has decided to review India's eligibility to enjoy duty free access for certain products in the American market under a tax benefit scheme.
As many as 3,500 Indian products from sectors such as chemicals and engineering get duty free access to the US market under the Generalized System of Preferences (GSP), introduced in 1976.
According to the US Trade Representative (USTR), the GSP is a trade preference programme designed to promote economic development by allowing duty-free entry for thousands of products from designated beneficiary countries.
The review can impact exports of those 3,500 Indian products to the US market as removal of duty benefits would make those items uncompetitive.
The Office of the US Trade Representative today announced that it is reviewing the eligibility of India, Indonesia, and Kazakhstan in the GSP based on concerns about the countries' compliance with the programme.
The reviews are based on the Trump administration's new GSP country eligibility assessment process as well as GSP country eligibility petitions.
For India, the GSP country eligibility review is based on concerns related to its compliance with the GSP market access criterion, the USTR said in a statement.
GSP provides an important tool to help enforce the Trump administration's key principles of free and fair trade across the globe. The President is committed to ensuring that those countries who receive GSP benefits uphold their end of the bargain by continuing to meet the eligibility criteria outlined by Congress, Deputy U S Trade Representative Jeffrey Gerrish said.
We hope that India, Indonesia, and Kazakhstan will work with us to address the concerns that led to these new reviews, he added.
Congress last month had voted to renew the GSP through 2020.
It also said that the petitions filed by the US dairy and medical device industries requested a review of India's GSP benefits, given Indian trade barriers affecting American exports in those sectors.
India has implemented a wide array of trade barriers that create serious negative effects on US commerce, it has alleged.
"The acceptance of these petitions and the GSP self-initiated review will result in one overall review of India's compliance with the GSP market access criterion," it added.
According to the USTR, the total US imports under GSP in 2017 was USD 21.2 billion, of which India was the biggest beneficiary with USD 5.6 billion, followed by Thailand (USD4.2 billion) and Brazil (USD 2.5 billion).
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