USTR takes India off developing country list

3 min read

News:The office of the United States Trade Representative(USTR) has taken off India from the list of developing countries that are eligible to claim benefits for preferential treatment with respect to Countervailing duties(CVDs) investigations

Facts:

Background:

  • In 1998,the US had come up with lists of countries classified as per their level of development to harmonise it with the World Trade Organization’s (WTO) Subsidies and Countervailing Measures (SCM) Agreement. 
  • Under this SCM agreement, countries that had not yet reached the status of a developed country were entitled to special treatment for purposes of countervailing measures. 
  • This meant that imports from these countries included were subject to different thresholds for determining if countervailing subsidies are de minimis(too trivial or minor to merit consideration) and whether import volumes are negligible.

About the issue:

  • USTR has now eliminated preferential treatment for India along with other countries such as Brazil, Indonesia, Hong Kong, South Africa, Malaysia, Thailand, Vietnam and Argentina.
  • This would make it easier for the US to impose countervailing duties(CVDs) on goods from India and certain other countries.

Why was India removed?

  • According to USTR,India’s share in global trade was 2.1 % for exports and 2.6% for imports in 2017.
  • India was also a G20 member which accounts for large shares of global economic output and trade.
  • Further, being a part of G20 India can be classified as a developed country despite having a per capita GNI below $12,375.

Additional information:

About Countervailing duty(CVD):

  • Countervailing duty(CVD) is an import tax imposed on certain goods in order to prevent dumping or counter export subsidies.