US withdraws benefits after G-4 failure: Kamal Nath

New Delhi, July 3: Commerce and Industry Minister Kamal Nath today warned that US's decision to end generalised system of preferences (GSP) on import of gold jewellery and brass lamps from India can lead to job losses in the jewellery sector in the country.

After the termination of trade benefits offered under the GSP to these items on June 28, export of Indian gold jewellary and brass lamps to the US will now attract tariffs.

India exported gold jewellary worth 1.6 billion dollars and brass lamps worth 20 million dollars to the US under the GSP programme in first ten months of '06.

US's decision came a week after negotations on the stalled Doha round of World Trade Organisation (WTO) reached a deadlock in Potsdam in Germany on June 22 when trade ministers of India, Brazil, the US and the EU failed to reach a consensus on the contentious issue of farm subsidies by developed countries and their demand for reduced tariff by developing countries on industrial goods.

On India's reaction to the US's decision, Mr Kamal Nath said '' GSP is a unilateral programme of the US government and is not a result of negotiations with GSP beneficiaries. Hence, it is up to the US to decide on how it wishes to administer the programme.

However, the decision is likely to lead to a number of jobs being lost in the jewellery sector in India, specially among vulnerable groups of society.'' The US administration, on June 28, decided not to renew the competitive needs limitation (CNL) waiver on imports of gold jewellery and brass lamps from India, thus ending the GSP preference, an official statement said here today.

The federal register notice is expected to be published soon and the changes will be effective within seven days of publication, it added.

GSP has been withdrawn from eight out of nine products for which the review was carried out under the new regulations. The only country which did not face the withdrawal is Columbia. Other products removed from the preferential GSP regime are kola nuts from Ivory Coast, wiring harnesses from the Phillipines, gold jewellary from Thailand and methanol from Venezuela.

Sigificantly, Brazil, one of the key participants in failed G-4 trade talks, also faced the US wrath like India as GSP benefits were also withdrawn on import of ship brakes, brake parts and ferrozirconium from Brazil.

Brazil exported brake and brake parts worth 242 million dollars and 7,00,000 worth of ferrozirconium to the US in 2006.

The GSP statute includes two CNLs on the eligibility of a product for benefits: if the annual trade of a product from a specific country exceeds a value-based threshold( 125 million dollars in 2006 ); or if the annual trade of a product from a specific country exceeds 50 per cent of the total US imports of that product.

The GSP statute indicates that well-established and globally competitive industries based in developing countries should compete on a level playing field with their countries, a US trade representative said.

UNI