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Of late, India and USA have been having disputes relating to trade barriers that they alleged to have imposed on each other, thereby hampering their trade and commerce business.

As per the USA Generalized System of Preferences (GSP), USA would grant trading opportunities, preferential market access, tariff advantages, and preferential duty free export of around 4800 products into the country from designated beneficiary countries.

India has been the largest beneficiary of the GSP among developing countries with around 3,500 products getting access to the USA market at low or no duty.

But in 2017, the Office of United States Trade Representative (USTR) announced a new process to assess beneficiary country eligibility based on revised criteria. For instance, to qualify for GSP, a beneficiary country must meet 15 eligibility criteria established by Congress, including respecting arbitral awards in favor of U.S. citizens or corporations, combating child labor, respecting internationally recognized worker rights, providing adequate and effective intellectual property protection, reducing barriers to services trade and investment, and providing the United States with equitable and reasonable market access. 

Thereafter, in 2018, the USTR announced that it is reviewing the eligibility of India in the GSP based on concerns related to its compliance with the GSP market access criterion and that it has also accepted two petitions filed by the U.S. dairy industry and the U.S. medical device industry requesting a review of India’s GSP benefits on the grounds of Indian trade barriers affecting U.S. exports in those sectors. According to them, India has implemented certain trade barriers that create serious negative effects on U.S. commerce. For instance, India requires that import of dairy products can only be done if they have been derived from animals which have never consumed any feeds containing internal organs, or blood meal, etc.

USA had earlier dragged India to World Trade Organization (WTO) challenging the various export subsidy programmes of India that are creating an uneven playing field and are adversely affecting the US businesses at the global level. The export subsidy programmes provide financial help to the domestic businesses in India. As a result of which prices of the products are lowered and the domestic businesses offer tough competition to foreign businesses.

Further, India claims that USA has hiked the import duties on steel and aluminium, thereby hampering the exports of these goods by India and other countries to USA.

Thus, various experts from India have commented on the trade disputes between India and USA stating that India should approach the WTO in case USA denies it preferential benefits in retaliation for the allegations of trade barriers that USA claims its exports face in India.

Harini Daliparthy

Senior Legal Associate

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