WENATCHEE, Wash. — The Washington apple industry worries U.S. enforcement of trade rules with India could heighten already restrictive tariffs, but the U.S. dairy industry applauds holding India accountable for “unjustified trade barriers.”
On March 4, President Donald Trump announced his decision to remove India from the Generalized System of Preferences program allowing developing countries to export goods to the U.S. without paying duties.
India has imposed a wide array of trade barriers that “create serious negative effects on U.S. commerce” and has failed to assure equitable and reasonable access to its markets in numerous sectors, the Office of the U.S. Trade Representative said.
Removal of India from the GSP will not take effect until May 3 at the earliest. Turkey is also slated to be removed.
India is one of Washington state’s top apple markets, but exports are down 56.4 percent so far in the 2018-2019 sales season, partly because importers over bought last season in anticipation of the usual 50% tariff jumping to 75% in response to U.S. steel and aluminum tariffs.
India has toyed for months with imposing that increase, but has yet to do so.
Removal from the GSP could cause that to happen, says Todd Fryhover, president of the Washington Apple Commission in Wenatchee. But, he said, there’s equal speculation India will show restraint, so it’s anyone’s guess what will happen.
April 1 is the next date for India to consider increasing the tariff, he said.
India typically imports a little more than 3 million, 40-pound boxes of Washington apples annually but last year reached slightly over 8 million as importers loaded up anticipating the additional 25% tariff.
As of Feb. 28, India has imported 1.29 million boxes so far this season compared to 2.9 million at the same point last year, according to the Washington State Tree Fruit Association. Washington has been aided by India’s closure to apples from China, Fryhover said.
In the meantime, India has denied market access to U.S. dairy products since 2003 despite receiving preferential access to the U.S. market under the GSP, the National Milk Producers Federation and the U.S. Dairy Export Council said in a joint press release.
“For 16 years India has enjoyed unilateral access to U.S. markets while (flouting) their obligation to provide fair market access mandated under the GSP program, and harming American dairy farmers in the process,” said Jim Mulhern, NMPF president and CEO.
“The administration has sent a clear message: abide by free and fair trade practices or face the consequences,” Mulhern said.
“The U.S. dairy industry strongly welcomes this enforcement action by USTR and hopes that it sets the precedent that unfair trade practices will not be tolerated, and compliance enforcement measures will be utilized when warranted,” said Tom Vilsack, chairman and CEO of the U.S. Dairy Export Council.
The U.S. dairy industry has worked alongside the federal government for years with the goal of coming to a mutually beneficial resolution with the Indian government, the two groups said.
However, India has failed to engage in good-faith negotiations to restore market access for U.S. dairy export, they said.