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US reduces trade benefits for India, Brazil news
29 June 2007

Washington: On the heels of the disputes over the WTO talks between the United States, the EU, Brazil and India in Potsdam, Germany, last week, the United States is terminating some trade benefits for India, Brazil and other developing countries

President George W. Bush issued a proclamation implementing the changes to the Generalised System of Preferences programme, which provided US duty-free access for $32.6 billion worth of goods from developing countries in 2006.

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 the US 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.

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.

The United States is revoking duty-free status for Brazil''s exports of brakes, brake parts and ferrozirconium, gold jewellery and brass lamps from India, methanol from Venezuela, wiring harnesses from the Philippines, gold jewellery from Thailand and kola nuts from Ivory Coast to the US market without paying US import duties, the US trade representative Susan Schwab''s office said in a statement.

India exported $1.6 billion in gold jewellery and $20 million in brass lamps to the United States under the GSP programme in the first 10 months of 2006, the USTR said when it initiated its review last year.

Commerce minister Kamal Nath, who has been in Washington for talks with US officials, issued a thinly veiled warning on Thursday of consequences if the United States cut the trading benefits saying, "We will take note ... If and when the moment comes, we''ll remember it wasn''t extended."

Sen. Charles Grassley, an Iowa Republican who pushed hard for the changes, said,
"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."

The revamped GSP programme allows the Bush administration to revoke duty-free treatment when imports of a certain good from one country exceed an annual cap of about $187.5 million, or comprise 75 per cent of total US imports of that product.

US trade officials said they terminated eligibility for 21 products as a result of their review, but maintained eligibility for 115 exports from countries whose trade exceeded statutory limits in 2006.

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US reduces trade benefits for India, Brazil