The United States is terminating some trade benefits for India, Brazil and other developing countries under the Generalised System of Preferences (GSP) programme that provided duty-free access for $ 32.6 billion worth of goods from developing countries, in 2006.

The proclamation to this effect, issued by President Bush on June 28, 2007, came a week after the G4 meet in Potsdam, Germany, ended without reaching any conclusion on  subsidies and tariffs (see earlier report ‘Potsdam G4 talks fail’). The US blamed the breakdown of talks on demands by Brazil and India for high farm subsidy cuts by the US.

In December 2006, US Congress approved a bill that provided new guidelines for determining whether a particular product is eligible for duty-free treatment under the GSP programme.

It was aimed at eliminating GSP eligibility for products where developing countries had shown they could compete without assistance.

The termination of trade benefits means that Brazil will no longer be able to ship brakes, brake parts and ferro-zirconium to the US market without paying US import duties.

The United States is also revoking duty-free status for gold jewellery and brass lamps from India, methanol from Venezuela, wiring harnesses from the Philippines, gold jewellery from Thailand, and kola nuts from the Ivory Coast.

India shipped $ 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, according to the US Trade Representative’s (USTR’s) review last year.

Brazil shipped $ 242 million in brake and brake parts, and $ 700,000 in ferro-zirconium in the same period, the USTR said.

India’s Commerce Minister Kamal Nath, who was in Washington for talks with US officials, reacted by saying there could be consequences if the United States cut benefits.

“We will take note... if and when the moment comes. We’ll remember it wasn’t extended,” Reuters quoted Nath as saying.

June 29, 2007