Jewellery Exports To US Lose GSP Crutch

Times News Network writes:

Despite strong lobbying by the Indian industry for extension of duty-free access to Indian gold jewellery in the US market, the US government withdrew the generalised system of preferences (GSP) benefit for the product on Thursday.

Other products for which import duty concession was withdrawn as part of the annual review of the GSP scheme include brass lamps from India, gold jewellery from Thailand and auto-parts from Brazil. The GSP scheme provides preferential duty-free entry into the US market to select products from developing countries.

Though widely anticipated, the withdrawal of the benefits has come as a double whammy for jewellery and brass lamp exporters from India who are battling an appreciating rupee that is leading to lower realisation. Jewellery exporters will now have to pay an import duty of 6.7% which will push up prices and lower the competitiveness of the industry in the US market.

US trade representative Susan Schwab had warned the Indian industry during her India visit in April this year that they should not expect an extension of the GSP benefit for gold jewellery when the scheme lapsed in June. She pointed out that as jewellery exports from India in 2006 had crossed $2 billion, it did not qualify for the benefit any more under the revamped qualification criteria of 2006.

The new rules allow the administration to revoke waivers when imports of a product from one country exceeds an annual cap of about $ 1.87 billion or comprises 75% of total US imports of that product. The GSP scheme was introduced by the US government in January 1976 for more than 4,650 products from about 140 countries including India. In 1992, the US had suspended GSP benefits for a large number of products exported by India apparently to express its unhappiness over the intellectual property rights regime in India. In August 2001, GSP benefits on 42 products from India were restored.

The US has also withdrawn GSP benefits on wiring harnesses from the Philippines, and methanol from Venezuela. The India lobby in the US Parliament had tried hard to get the GSP benefit extended for Indian jewellery exporters. In a letter to US trade representative Susan Schwab, two senior parliamentarians had argued that revoking the benefit scheme for gems & jewellery from India and Thailand was not justified as it would only help China in grabbing a larger share of the market.

More info @ http://economictimes.indiatimes.com/Jewellery_exports_to_US_lose_GSP_crutch/articleshow/2162769.cms