India: Effects of Tariffs and Nontariff Measures on U.S. ... - USITC

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Cargill Incorporated 7 In a written submission, Cargill Incorporated, a privately held company, stated that it is an international producer <strong>and</strong> marketer <strong>of</strong> food, agricultural, financial, <strong>and</strong> industrial products <strong>and</strong> services. Cargill’s operations in <strong>India</strong> include several businesses, employing several hundred people. 8 Cargill stated that the importation <strong>of</strong> U.S. agricultural products into <strong>India</strong> by its <strong>India</strong>n operations is limited relative to its agricultural imports from other origins (e.g., crude edible oils from South America <strong>and</strong> Southeast Asia <strong>and</strong> sugar from Asia). Cargill listed several recommendations that could reduce policy distortions in the food system to advance economic relationships in agriculture between <strong>India</strong> <strong>and</strong> the United States. Cargill recommended the elimination <strong>of</strong> production subsidies in both countries <strong>and</strong> the reassessment <strong>of</strong> agricultural input subsidies, such as fertilizer, in <strong>India</strong>. Cargill explained that <strong>India</strong>n input subsidies, which are currently based on specific fertilizer products, should be non–product specific <strong>and</strong> nutrient based. A second recommendation was the reduction <strong>and</strong> capping <strong>of</strong> tariffs at applied rates rather than bound rates. Cargill noted that high tariffs on processed foods limited <strong>India</strong>n consumers’ access to U.S. processed foods. In addition, Cargill noted that <strong>India</strong> should maintain the zero duty on vegetable oils <strong>and</strong> harmonize the tariff rates for all vegetable oils to allow <strong>India</strong>n consumers access to their preferred choice <strong>of</strong> oils. Cargill also recommended that <strong>India</strong> consistently apply sound science to its decisions. In particular, Cargill stated that <strong>India</strong> should implement a system that expeditiously reviews <strong>and</strong> approves genetically modified organisms <strong>and</strong> that <strong>India</strong>n food laws, regulations, <strong>and</strong> specifications should conform to global st<strong>and</strong>ards (e.g, Codex Alimentarius (Codex), OIE, <strong>and</strong> IPPC). Among other recommendations listed by Cargill in its written submission is the adoption <strong>of</strong> the nationwide goods <strong>and</strong> service tax to reduce regional trade barriers <strong>and</strong> the consistent operation <strong>of</strong> the futures market so that it may operate effectively as a risk management <strong>and</strong> price discovery tool for farmers. Cargill also stated that there needs to be “increased opportunities for increased investment in agricultural <strong>and</strong> food production infrastructure” <strong>and</strong> “promotion <strong>of</strong> innovations <strong>and</strong> technological advancements in agriculture <strong>and</strong> food production, distribution, marketing, <strong>and</strong> retail to link the farmer to the consumer.” 9 Distilled Spirits Council <strong>of</strong> the United States 10 The Distilled Spirits Council <strong>of</strong> the United States (DISCUS) is a national trade association representing U.S. producers, marketers, <strong>and</strong> exporters <strong>of</strong> distilled spirits products. DISCUS noted that <strong>India</strong> represents the fifth-largest global market for distilled spirits, which presents “enormous opportunities” for U.S. spirits exporters, particularly exporters <strong>of</strong> U.S. whiskey. DISCUS noted that <strong>India</strong>n dem<strong>and</strong> for spirits is among the 7 Cargill Inc., written submission to the USITC, June 30, 2009. 8 Cargill is invested in the h<strong>and</strong>ling <strong>and</strong> processing <strong>of</strong> various products, including refined oils, grain <strong>and</strong> oilseeds, sugar, cotton, <strong>and</strong> animal feeds. Cargill also develops flavor systems <strong>and</strong> operates a value investing business in <strong>India</strong>. 9 Cargill Inc., written submission to the USITC, June 30, 2009, 7–9. 10 Distilled Spirits Council <strong>of</strong> the United States, written submission to the USITC, June 25, 2009. D-6
highest in the Asia-Pacific region. Growth rates <strong>of</strong> consumption have exceeded 80 percent during 2003–08. DISCUS argued that exceptionally high <strong>India</strong>n tariffs on spirits (150 percent) have “severely impeded” the sale <strong>of</strong> U.S. spirits in the <strong>India</strong>n market. DISCUS asserted that the <strong>India</strong>n spirits tariff is dramatically higher than those <strong>of</strong> the “vast majority” <strong>of</strong> developing countries (e.g., China’s spirits tariff is 10 percent). The association noted that the <strong>India</strong>n government has modified its spirits duties a number <strong>of</strong> times since 2001 to bring them in line with its WTO commitments. DISCUS stated that it is seeking assurances that the central government will not reimpose additional duties that would exceed <strong>India</strong>’s WTO bound-level commitment. DISCUS noted that certain states apply discriminatory measures to imported spirits, including taxes <strong>and</strong> fees that are not imposed on domestically produced spirits. DISCUS reported that certain <strong>India</strong>n labeling requirements are inconsistent with the Codex st<strong>and</strong>ards regarding such issues as ingredients, packaging dates, <strong>and</strong> nutritional information. Florida Citrus Mutual 11 In its written submission, Florida Citrus Mutual (FCM) stated that it represents more than 90 percent <strong>of</strong> Florida’s citrus growers <strong>and</strong> is a voluntary cooperative association with an active membership <strong>of</strong> more than 9,000 Florida citrus growers who produce for the fresh <strong>and</strong> processed markets. The FCM stated that <strong>India</strong> represents a large <strong>and</strong> potentially important market for U.S. fresh citrus <strong>and</strong> citrus juices but that tariffs <strong>and</strong> nontariff measures (NTMs) are impeding U.S. exports. The association stated that <strong>India</strong> has a large population, including a growing <strong>and</strong> health-conscious middle class, <strong>and</strong> has experienced steady transformation <strong>of</strong> its retail food sector, including the entrance <strong>of</strong> large <strong>India</strong>n conglomerates in food retailing. In addition, <strong>India</strong> has a growing number <strong>of</strong> quick-service chains <strong>and</strong> luxury hotels, increasing exposure to Western products <strong>and</strong> lifestyles, increasing urbanization, <strong>and</strong> a growing food processing industry looking for imported food ingredients. The FCM stated that the United States has not been able to export more than a trace amount <strong>of</strong> orange or grapefruit juice to <strong>India</strong> during the past five years <strong>and</strong> none in 2008. The FCM argued that high tariffs, “dated food laws,” unwarranted sanitary <strong>and</strong> phytosanitary restrictions, poor infrastructure, <strong>and</strong> restrictions on foreign direct investment in food retailing have seriously impeded trade. <strong>India</strong>n tariffs <strong>and</strong> duties on citrus juice are equivalent to an effective rate <strong>of</strong> about 53 percent ad valorem. Additional duties include a countervailing duty <strong>of</strong> 16 percent on most consumer food products, an educational cess <strong>of</strong> 3 percent, <strong>and</strong> a special countervailing duty <strong>of</strong> 4 percent, which is assessed on most imports. The FCM stated that NTMs include complicated <strong>India</strong>n food laws, including those pertaining to the use <strong>of</strong> additives <strong>and</strong> colors, labeling <strong>and</strong> packaging requirements, weights <strong>and</strong> measures, shelf-life issues, <strong>and</strong> phytosanitary requirements. The FCM supports efforts to reduce measures affecting trade, including the prohibitory tariffs <strong>and</strong> NTMs that <strong>India</strong> imposes against U.S. citrus juice <strong>and</strong> other citrus products. It also supports efforts to reduce the multiple additional duties that have made it very difficult for U.S.-produced citrus juice to have access to <strong>and</strong> compete in the large <strong>India</strong>n market. 11 Florida Citrus Mutual, written submission to the USITC, June 26, 2009. D-7
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United States International Trade C
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U.S. International Trade Commission
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Abstract This report describes <str
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TABLE ES.1 India:
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U.S. agricultural products face str
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U.S. Foreign Direct Investment U.S.
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CONTENTS Page Abstract ............
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CONTENTS―Continued Chapter 6 <str
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CONTENTS―Continued Figures 1.1. <
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ACRONYMS AND TERMS AAY Antodaya Ann
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ACRONYMS AND TERMS—Continued RGGV
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TABLE 1.1 India: A
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FIGURE 1.1 India:
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India’s central
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Despite their weak economic pr<stro
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Approach Current India</str
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Bibliography Birner, Regina, Surupt
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World Bank. Agriculture for Develop
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FIGURE 2.1 India:
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TABLE 2.1 India: A
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FIGURE 2.3 India:
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premium); (2) India</strong
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include government export restricti
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TABLE 2.3 India: A
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FIGURE 2.6 India:
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Exports by Major Trading Partner <s
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CHAPTER 3 Domestic Consumption Over
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TABLE 3.2 India: P
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more likely to have been exposed to
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BOX 3.3 Indian Con
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TABLE 3.3 India: T
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are expected to see income growth <
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Food Preferences India</str
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Regional Variation Geographic <stro
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CCC. “Know India
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CHAPTER 4 Indian A
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For most crops, however, In
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The Farm Sector soybeans 29 —but
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Food processing in India</s
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BOX 4.1 The Central Government’s
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BOX 4.2 Does the Minimum Support Pr
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August 3, 2009, New Delhi announced
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known as zamindars, have doubled or
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that the PFA Act was strictly enfor
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———. Bharat Nirman: A Time-Bo
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Organisation for Economic Co-operat
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CHAPTER 5 TARIFFS Overview
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sensitive. They include vegetable f
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wholly milled rice and</str
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The Indian governm
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India also reporte
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Reference Prices Reference prices,
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Landing Fees <stro
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Simulated Effects
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and nuts” by $0.
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5-19 TABLE 5.4 India</stron
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Bibliography Acharya, Keya. “Thor
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Indian Express.com
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CHAPTER 6 Nontariff</strong
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foreign sources. 6 For example, SPS
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BOX 6.1 Milk and M
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BOX 6.2 Wheat—Continued Yet, <str
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perpetuated continuously. The impor
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notices that must be integrated wit
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import corn under the TRQ is too bu
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Customs Procedures India</s
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Corruption Interests within <strong
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TABLE 6.2 India: E
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Bibliography American Apparel <stro
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Mattson, Jeremy W., Won, W. Koo, <s
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———. 2009 National Trade Esti
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TABLE 7.1 India: C
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First Point of Sal
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Private mandis Som
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approximately 65 million households
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7-10 TABLE 7.2 India</stron
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poor communications infrastructure
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limited popularity with farmers bec
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The lack of infras
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found that 39 percent of</s
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Bibliography Banerjee, A. Dairying
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Tiwari, Shri Rajendra Kumar. “Pos
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FDI Regulations and</strong
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Page 174 and 175: Food Processing and</strong
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Page 178 and 179: For processing of
Page 180 and 181: BOX 8.3 Restrictions on Foreign Joi
Page 182 and 183: Under certain circumstances, FDI ca
Page 184 and 185: commenced. States tend to be quick
Page 186 and 187: Bibliography Bahn, Niti, an
Page 188 and 189: International Center for Alcohol Po
Page 190 and 191: Structure of the <
Page 192 and 193: BOX 9.1 The UPOV System for Plant V
Page 194 and 195: that the public sector in I
Page 196 and 197: Whether this situation will soon ch
Page 198 and 199: The U.S.-India Bus
Page 200 and 201: eggplant, which began field trials
Page 202 and 203: Maskus, Keith E. “Intellectual Pr
Page 205: APPENDIX A REQUEST LETTER
Page 208 and 209: The Honorable Sham L. Arano
Page 211 and 212: cprice-sewell on PRODPC61 with NOTI
Page 213: APPENDIX C HEARING WITNESSES
Page 216 and 217: ORGANIZATION AND WITNESS: Tuttle Ta
Page 219 and 220: Summary of Views <
Page 221: advertising and pr
Page 225 and 226: to U.S. exports to India</s
Page 227 and 228: transparent sanitary regulations th
Page 229 and 230: hotel and catering
Page 231 and 232: Western Pistachio Association 26 In
Page 233: APPENDIX E POTENTIAL FOR U.S. AGRIC
Page 236 and 237: E-4 TABLE E.1 India</strong
Page 243: APPENDIX F INDIAN AGRICULTURAL PROD
Page 246 and 247: TABLE F.1 India: A
Page 248 and 249: FIGURE F.1 India:
Page 250 and 251: is in nonirrigated areas with yield
Page 252 and 253: Consumption India
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Page 260 and 261: Cotton During MY 2003/04-2007/08, <
Page 262 and 263: Government of <str
Page 265: APPENDIX G UNION AND STATE/UNION TE
Page 268 and 269: certain agricultural goods in the p
Page 270 and 271: Bibliography Chaulan, Shri U.K. “
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Simulation Framework The effects <s
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Producers determine the optimal sup
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Applied ad valorem tariff equivalen
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We considered the possibility that
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Estimation of <str
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Bibliography Anderson, Kym, Mariann
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