Washington: The US is terminating some trade benefits for India, Brazil and other developing countries under a programme revamped late last year by Congress, the White House said on Thursday.
President George W. Bush issued a proclamation implementing the changes to the Generalized System of Preferences (GSP) program, which provided US duty-free access for $32.6 billion (Rs1.3 trillion) worth of goods from developing countries in 2006.
The decision came just one week after an acrimonious meeting in Potsdam, Germany, between the US, the EU, Brazil and India that failed to produce a long-awaited breakthrough in world trade talks.
US officials accused the two leading developing countries of making impossible demands for cuts in US farm subsidies, while refusing to substantially open their own markets to more US farm and manufactured goods.
However, the action has its roots in a Bill approved by Congress in December which provided new guidelines for determining whether a particular product is eligible for duty-free treatment under the GSP programme.
Those reforms were motivated by frustration in Congress over Brazil and India’s role in the trade talks, and were aimed at eliminating GSP eligibility for products where developing countries had shown they could compete without assistance.
The decision announced on Thursday means Brazil will no longer be able to ship brakes, brake parts and ferrozirconium to the US market without paying US import duties, the US trade representative’s office said in a statement.
The US also is revoking duty-free status for gold jewellery and brass lamps from India, methanol from Venezuela, wiring harnesses from the Philippines, gold jewellery from Thailand and kola nuts from the Ivory Coast.
India shipped $1.6 billion in gold jewellery and $20 million in brass lamps to the US under the GSP programme in the first 10 months of 2006, US trade representative said, when it initiated its review last year.
Brazil shipped $242 million in brake and brake parts and $700,000 in ferrozirconium in the same period.
Commerce minister Kamal Nath, who has been in Washington for talks with US officials, said on Thursday there could be consequences if the US cut benefits. “We will take note ... if and when the moment comes. We’ll remember it wasn’t extended,” Nath said.
Senator Charles Grassley, who pushed hard for the changes, praised the Bush administration’s action.
“I’m increasingly questioning why we provide preferential treatment at all to products from countries such as Brazil, India, and Venezuela ... (which) have actively worked against the trade interests of the United States,” Grassley said.