India Asking to Return to GSP; Irritants That Led to Dismissal Unresolved

India and the U.S. should aim for "economically meaningful outcomes" from better customs and trade facilitation, supply chain linkages, trade in high-tech products and trade in critical minerals between the two countries, India's commerce minister and U.S. Trade Representative Katherine Tai said in a joint statement.

While India and the U.S. had about $200 billion in two-way trade last year, including services, that number should be higher because of the size of the two countries' economies, Commerce Minister Shri Piyush Goyal and Tai said after holding a Trade Policy Forum in New Delhi Jan. 12.

They said they are engaging on trade facilitation, including digitalizing trade facilitation and the WTO Trade Facilitation Agreement. That is something the U.S. has been talking to India about for many years, and two years ago, the U.S. pushed for deadlines to meet goals.

India was removed from the Generalized System of Preferences benefits program in 2019 because U.S. exporters complained about various trade barriers, including price controls on stents and knee implants and barriers to dairy exports.

The two sides continue to talk about pricing issues for stents and knee implants. The statement said they "noted that this engagement would facilitate access to cutting-edge medical technology for patients." In the same paragraph, the leaders said they talked about active pharmaceutical ingredients -- which largely come from China -- and the need to diversify the pharmaceutical supply chain. India is a dominant supplier of generic drugs to the U.S., but many of the chemicals that make up the pills are manufactured in China. "India emphasized the need to increase the number of inspections by the U.S. Food and Drug Administration (U.S. FDA) in India to facilitate trade and continue to reduce the backlog," the statement said.

Goyal told Tai that India wants to return to eligibility in GSP. "Ambassador Tai noted that this could be considered, as warranted, in relation to the eligibility criteria determined by the U.S. Congress."

In the last year India was in the program, according to GSP advocates, the program saved importers of GSP-eligible goods from India $300 million annually. According to USTR, $5.6 billion of the program's $21.1 billion in imports were from India in 2018, and India was the top GSP country. Almost 12% of India's exports to the U.S. were covered by GSP.

India has been pushing to return to GSP for years (see 2111230011), but one of the market opening moves it announced to satisfy U.S. exporters two years ago, to import U.S. alfalfa hay, has not been fulfilled, according to this statement. It said the two talked about "necessary regulations regarding import of animal feed products, including alfalfa hay."

According to the statement, Tai said she was glad that the way India has implemented its new import requirements for computers, tablets and servers has minimized trade impacts, and that she hoped that would continue (see 2311280051, 2308170028 and 2308030074).

They said they will continue to use the Trade Policy Forum to resolve trade irritants, rather than turning to the World Trade Organization. They plan to hold another forum meeting before the end of the year.