House Members Ask USTR to Negotiate With New Indian Government Before Terminating GSP

Twenty-five House members, led by former New Dems Chairman Jim Himes, D-Conn., asked U.S. Trade Representative Robert Lighthizer not to terminate India as a beneficiary under the Generalized System of Preferences program before a new government is seated in that country. India is in the midst of elections now. India could be terminated as early as May 4, since notice was given March 4. India is the top beneficiary of GSP, accounting for $5.6 billion of the program's $21.1 billion in imports last year, according to USTR. Almost 12 percent of India's exports to the U.S. are covered by GSP.

The bipartisan letter, dated May 2, noted that the latest GSP renewal passed the House almost unanimously. "Such strong support comes from the recognition that GSP promotes growth both in the United States and developing countries," they said. They said that without GSP, importers would pay hundreds of millions more annually in duties, and that terminating India from the program would also set back negotiations for better access to Indian customers. The USTR said that India was being terminated because of long-standing irritants on pricing controls on knee replacements and stents (see 1803300022) and because it restricts dairy exports because U.S. cows are not vegetarian. The medical device interest group and dairy exporters have been asking for India's removal from GSP since October 2017 (see 1710190022).

"It will be up to India’s next government to resolve outstanding issues with the United States, but seating that government and restarting negotiations also requires time. A decision to terminate GSP in the midst of the elections risks politicizing the issues further, with potentially negative consequences for broader relations with an important ally," the letter said.

USTR did not answer a question on whether India will exit on May 4, and if not, when the proclamation about the termination might be issued.