Two senior US senators, who head the bipartisan India caucus in the upper chamber of congress, joined Friday a growing demand for the US trade representative (USTR to delay a presidential proclamation terminating duty-free benefits for some imports from India by at least 30 days.
The proclamation is due in a fortnight on May 4, at the end of a 60-day notice period that started March 4 when the White House notified US congress of the Trump administration’s intention to terminate India’s eligibility for the duty-free programme called the Generalized System of Preferences (GSP.
Senators John Cornyn, Republican, and Mark Warner, Democrat, urged the USTR, Robert Lighthizer, in a joint letter to delay the presidential proclamation for “at least 30 days” in order to “move the negotiations beyond India’s elections”.
They added; “We believe that the election season may serve as a hindrance for our Indian counterparts in negotiating and concluding a deal on difficult political issues.If another round of negotiations during the election season does not address the outstanding issues, we would ask you to consider delaying the issuance of the presidential proclamation.”
Representative George Holding, the Republican co-chair of the India Caucus in the House of Representatives, made a similar appeal to the USTR in an earlier letter for delaying the proclamation till after the elections. “It is important that we have a non-political conversation about our differences and how we can best move forward, and I am concerned that this is not the right time to address India’s GSP eligibility,” he wrote.
Other US lawmakers have weighed in as well. “My hope is that we can delay, the termination of these GSP preferences until after the elections in India so that we can have a non-political conversation that is very focused on how we collectively can move forward together,” said Representative Tulsi Gabbard, former India caucus co-chair who is running for the Democratic presidential nomination, at a recent event on Capitol Hill.
To be clear, the lawmakers, who are from both parties, have only sought more time for negotiations, but not a mitigation of the Trump administration’s demands and efforts to address market access issues, which, Cornyn and Warner wrote, “we fully appreciate and support”.
In the notification to congress, the White House had cited only one reason for terminating the GSP benefits — India had “not assured the United States that it will provide equitable and reasonable access to” its markets for, not naming them, American dairy product and medical devices.
India is the largest beneficiary of the GSP and exported $5.6 billion worth of goods under the duty-free programme in 2017. It will have to pay an estimated $190 million in tariff on these exports, according to the government of India, if its eligibility for the benefits was ended, as intended by the administration.
Additionally, there are fears that India might also lose American buyers of thee goods because of the higher duty, which will make them costlier. “American buyers can simply switch to other suppliers to keep their costs down and that will be terrible for the Indian supplies who are mostly small and medium enterprises,” said a person close to the negotiations.
The two senators made a similar point in their letter to Lighthizer, arguing American consumers may be hit. The withdrawal of the concessions, they said, “will make Indian exports of eligible products to the United States costlier” because of the routine duties that will applied to them and “some of these costs will likely be passed on to American consumers”.
The USTR began a review f India’s GSP eligibility in 2018 citing lack of market access for American dairy products and medical devices and announced the administration’s intention to remove India from the GSP list of around 190 beneficiaries citing failure to extract a positive assurance.
Though the termination decision was in the air, India was disappointed when it was announced because there was hope that it could be delayed till after the elections to allow negotiators more time to resolve issues that have dogged bilateral ties for a long time, from before President Donald Trump took office.
There was also a sense of being let down at the implicit lack of understanding India’s earnest efforts to address outstanding trade issues — drastically cutting duty on imported Harley-Davidson motorcycles, a pet issue for the president, and scaling up imports (oil and gas specifically, for instance from the United States to drastically reduce its trade surplus, another of President Trump’s trade goals.
Talks have continued. Commerce minister Suresh Prabhu told Hindustan Times recently India has “given a package to [the] US, which will actually address many of the issues in proper manner”.
There has been no word from the USTR or the administration if the proclamation, due in a fortnight now, will be delayed. But the United States appears in no mood to relent on the market access issues, and there is an understanding that it’s up to India to prevent the delisting, by conceding US demands.