Trade barriers: US threats may hit one-fourth of its GSP imports – from India

Incidentally, a senior Indian Embassy official in Washington was documented telling a Washington DC-based medical device lobby group Advanced Medical Technology Association (AdvaMed) late last year that “in the grand scheme of things GSP (Generalised System of Preferences) is not a big deal” in India-US trade overall and that he “wasn’t going to lose sleep over it”.

Union Commerce Minister Suresh Prabhu is presently on a two-day visit to the US to discuss various trade issues, including the Trump Administration’s decision to review the GSP scheme. India told the US on June 5 that their decision to review GSP was “discriminatory”, “arbitrary” and that it “will cause irreparable damage” to India’s exports.

AdvaMed is one of the two lobby groups — apart from the US dairy industry — that had filed petitions requesting a review of India’s GSP benefits citing “Indian trade barriers” affecting US exports in those sectors, based on which the review has now been undertaken. AdvaMed primarily represents US medical device, pharma and tech majors such as Abbott, Boston Scientific Corporation, Medtronic, BD, Pfizer, GlaxoSmithKline, Apple and Microsoft.

In April this year, the office of the United States Trade Representative (USTR) launched a self-initiated GSP eligibility review of India based on concerns related to India’s compliance with the GSP market access criterion. It also accepted two petitions, which were filed by the US dairy industry and AdvaMed, requesting a review of India’s GSP benefits as there are “Indian trade barriers” affecting the US exports in those sectors.

Exports from India to the US under GSP have been rising steadily, bucking the broader declining trend in overall exports. Exports from India to the US under GSP rose from $4.58 billion in 2015 to $4.68 billion in 2016 and to $5.58 million in 2017. The total GSP imports from all countries into the US ranged between $17.54 billion and $20.77 billion in the three-year time period of 2015-2017.

Meanwhile, India’s overall exports have faltered, down from $310.53 billion in 2014-15 to $262.29 billion in 2015-16, before recovering marginally to $276.55 billion in 2016-17. The GSP is a discretionary programme that expired on December 31, 2017.

On October 18, 2017, Abby Pratt, vice president for Global Strategy and Analysis, AdvaMed, wrote an email to officials of various US departments, including the State Department and the USTR. In her email, Pratt talked about her meeting with Puneet Kundal, designated as Minister (Commerce) in the Indian Embassy in Washington DC. This meeting was held around the time Pratt’s email was sent.

“Earlier today, AdvaMed submitted the attached GSP petition to USTR and our CEO Scott Whitaker issued the following statement to select media outlets. Later in the day, I paid a courtesy call to Minister of Commerce Puneet Kundal at the Indian Embassy informing him of our decision to move forward with the petition. I’m quite sure Puneet was aware of our plans and therefore not overly surprised,” Pratt wrote in her email.

“He appreciated the heads up and understood that AdvaMed was doing what it believed was in the interest of its members. He stiffened a bit towards the end, saying that in the grand scheme of things GSP is “not a big deal” (in terms of overall trade) and he “wasn’t going to lose sleep over it”. He admitted that the situation is political and “when the PM makes an announcement, the bureaucracy falls in line,” stated the mail.

In response to specific queries sent by The Indian Express regarding the contents of Pratt’s email, Kundal stated: “The letter quoted by you is presumably a communication from a private US body to the office of USTR. I am not party to the contents of that correspondence … The GSP is a significant bilateral program, which we believe is beneficial to both the countries. The US Government is in the process of reviewing GSP; we continue to engage with them intensively for continuation of these benefits to India.”

In order to make medical devices affordable, India had imposed price caps on coronary stents and knee implants in February and August 2017.

AdvaMed has strongly opposed these caps stating that it has the “potential to block innovations and limit access to world-class medical care and options to deserving patients”. In response to specific queries regarding the aforementioned Pratt’s email, AdvaMed stated: “As part of this ongoing dialogue, we have been in touch with several stakeholders and have conducted multiple conversations – each possessing its own context and background. Therefore, to pick isolated conversations without putting that in perspective, and to also understand the background may not reflect the true picture. Thereby, it will lead to misguiding the audience.”

It added: “We would like to take this opportunity to provide our view and intent that will help you understand the overall picture and place some of the conversations in their rightful place. We believe that AdvaMed, as well as the Government of India, are aligned towards the larger goal of ensuring access to affordable and quality healthcare while building an environment that is ‘innovation-friendly, predictable and sustainable’.”