The US government has said that it will consider linking benefits enjoyed by Indian exports under the Generalised System of Preferences (GSP) scheme to market access for US soda ash.
The veiled warni…
The US government has said that it will consider linking benefits enjoyed by Indian exports under the Generalised System of Preferences (GSP) scheme to market access for US soda ash. The veiled warning implies in effect that the US government is hinting that it might withdraw GSP benefits to Indian exports unless fair and equitable market access is given to US soda ash exports to India. India“s exports to the US under the GSP scheme is now worth around US$ 400 million, and textiles, gems and jewellery account for the bulk of these. The US position has been conveyed in a joint letter written by US trade representative (USTR) Charlene Barshefsky and commerce secretary William Daley to commerce and industry minister Murasoli Maran. The issue exemplifies the tension between India and the US over tariffs and market access even as the QR issue has been resolved. “The American Natural Soda Ash Corporation (ANSAC) has filed a petition with USTR to suspend GSP for India until there is a demonstration of real progress towards fair and equitable market access for soda ash. We will be carefully considering ANSAC“s arguments, as well as any new developments on this issue, over the next 6 months of our review of new GSP applications and the status of existing GSP grants. We hope that your new government can address the market access concerns that lead to the GSP petition so that an amicable resolution can be achieved,” states the letter. Expressing surprise at the letter, industry observers say it is unusual for the USTR and the commerce secretary to write to the Indian government on an individual issue, and this indicates the clout of the US soda ash industry. It is expected that this issue will be taken up in the run-up to, as well as during the visit of president Clinton later this month. The GSP scheme entitles exports from developing countries to the US or EU duty free or on concessional duty benefits. ANSAC has filed a petition urging the US administration to deny certain duty free benefits to US imports from India until such time as US soda ash is given equitable and reasonable access to India“s market. The Barshefsky-Daley letter states that a de facto embargo has been maintained by the Indian government since “96 under a temporary injunction imposed by the Monopolies & Restrictive Trade Practices Commission (MRTPC), and this matter should be resolved at the earliest possible opportunity. It adds that India“s 38.5% import duty rate on soda ash is the highest in the world, and the tariff along with other import fees yields an unacceptable 69.9% burden on US soda ash exports. “By any standard, US access to India“s soda ash market has been rendered unviable,” says the letter. ANSAC has estimated that India would have to lower its import tariff on soda ash to 12% before individual US soda ash producers could compete effectively in the Indian market. This action would result in a reduction in the net effective import fee to 38.92% (12% tariff plus 10% surcharge plus 18% countervailing duty plus four per cent SAD). The leading domestic soda ash producers include Tata Chemicals, Gujarat Heavy Chemicals, Nirma Chemicals, Tuticorin Chemicals and Birla VXL. The total domestic soda ash production is worth 18.6 lakh tonnes per annum, and in “97-98, the country imported 1.7 lakh tonnes of the product. Soda ash is being imported into India currently from Bulgaria, Romania, China, Hong Kong and Kenya. There have been no imports from the US in the past few years.