US cuts trade benefits for India, Brazil

1 Jul, 2008, 0458 hrs IST, REUTERS

WASHINGTON: Gold necklaces from India, an alloy from Brazil and 23 other developing country products will no longer receive US duty-free treatment, the US Trade Representative's office said on Monday. The decision was the result of an annual review of the Generalized System of Preferences, a program created in 1974 that allows 132 developing countries to export nearly 5,000 products to the United States without paying tariffs.

The United States imported $30.8 billion worth of goods under the GSP program in 2007. As a result of the latest review, 25 products that accounted for about $1.4 billion of the 2007 imports will no longer receive duty-free treatment, USTR said.

Partly because of frustration with India and Brazil's role in the Doha round of world trade talks, Congress passed tougher criteria for the GSP program in December 2006. Lawmakers such as Sen. Charles Grassley, an Iowa Republican, said they were annoyed India and Brazil received duty-free treatment under the program but were refusing in the Doha round to open their own markets to more imported goods.

"Congress created the GSP program to serve as a bridge for developing countries as they increase their participation in the global trading system," US Trade Representative Susan Schwab said in a statement announcing the results. Under the GSP program, countries automatically lose duty-free access when their exports to the United States exceed certain thresholds.

The president can issue a waiver to restore duty-free benefits. But the 2006 law directed the White House to revoke waivers in place for more than five years if the imports met certain "super-competitiveness" criteria. As a result of those new rules, waivers were revoked for $266 million worth of gold necklaces and related products from India, $233 million of jewelry from Turkey, $151 million of the alloy ferroniobium from Brazil and $6.6 million of peanuts from Argentina, USTR said.

Waivers were denied for 21 other developing country products that exceeded GSP thresholds for the first time. Those included $172 million of zinc and $162 million of ferrochromium from Kazakhstan and $161 million of insulated ignition wiring and $154 million of biodiesel from Indonesia. Waivers were continued for 99 products from 15 developing countries.

The largest item on that list was $17 million worth of color televisions from Thailand. Altogether, those waivers will allow continued duty-free treatment for imports that totaled $422 million in 2007, USTR said.