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

More documents

Recommendations

Info

Yet, 2007 was not a representative year for <strong>India</strong>’s wheat market. <strong>India</strong>n imports <strong>of</strong> wheat fluctuate greatly from year to year <strong>and</strong> were unusually high in 2006 <strong>and</strong> 2007 by historical st<strong>and</strong>ards. <strong>India</strong>’s annual wheat imports in 2006 <strong>and</strong> 2007 amounted to approximately $1.3 billion (5–6 million mt) in each year. By contrast, in the 12-year period from 1997 to 2008, <strong>India</strong> reported imports <strong>of</strong> less than $1 million (less than 5,000 mt) during six years, including two years <strong>of</strong> zero imports, <strong>and</strong> imports <strong>of</strong> $180– $280 million (700,000 mt to 2 million mt) in four years. An assumption that U.S. wheat sales would equal an amount equivalent to more than 20 percent <strong>of</strong> <strong>India</strong>’s 2007 wheat imports leads to unrealistically large displacement <strong>of</strong> <strong>India</strong>’s domestic production <strong>of</strong> wheat <strong>and</strong> similarly unrealistic effects on <strong>India</strong>’s other crops. Accordingly, we assumed that, in the absence <strong>of</strong> <strong>India</strong>n NTMs, U.S. wheat exports to <strong>India</strong> would represent the U.S. global share <strong>of</strong> world wheat exports over a longer term, applied as a share <strong>of</strong> <strong>India</strong>’s typical imports <strong>of</strong> wheat. For the last 10 years in which <strong>India</strong> reported positive imports, the median imports amounted to approximately 1.04 million mt, or about 20.6 percent <strong>of</strong> <strong>India</strong>’s 2007 imports. The U.S. median share <strong>of</strong> world wheat exports over the 10 years from 1999 to 2008 is 26.0 percent. Thus, a typical U.S. global market share in the long term <strong>of</strong> <strong>India</strong>’s typical wheat imports amounts to approximately 5.36 percent <strong>of</strong> <strong>India</strong>’s 2007 imports. 18 This share was the basis for the estimation presented here. Simulation <strong>of</strong> Economic <strong>Effects</strong> The NTM price gaps were aggregated to GTAP sectors, <strong>and</strong> the effects <strong>of</strong> their removal were simulated in the GTAP model. The estimated price gaps, before <strong>and</strong> after aggregation, are presented in table 6.1. Because <strong>of</strong> the large values for many <strong>of</strong> the price gaps (100–1,000 percent), it is not computationally tractable to estimate their removal using a PE model simulation. The aggregation to GTAP sectors reflects the fact that, in some cases, estimated price gaps at the HS6 level apply to some products in the sector but not all, as reflected in table 6.1, which shows the difference between the average NTM price gaps for relevant products <strong>and</strong> for the GTAP sector. The price gaps were aggregated to the sector level using a method that holds the implied NTM rents for the aggregate equal to the sum <strong>of</strong> implied NTM rents at the HS6 level. 19 For wheat, the simulation was performed in such a manner as to set the final share <strong>of</strong> U.S. exports in <strong>India</strong>’s imports at 27 percent. A GTAP model simulation baseline for the NTM estimates was prepared excluding the tariffs, <strong>and</strong> the sector-specific price gaps were simulated as gaps between the c.i.f. value <strong>and</strong> the l<strong>and</strong>ed duty–paid value. Such price gaps were then removed. The results <strong>of</strong> this procedure are reported in table 6.2. These results include a sensitivity analysis with respect to the elasticities, similar to that performed for tariffs. 18 206 * 0.260 = 0.0536, approximately. 19 This method uses the relation (reference export unit value)*(1 + transport margin + NTM price gap) = (reference import unit value). Thus, implied NTM rents = (NTM price gap/(1 + transport margin + NTM price gap))*(value <strong>of</strong> c.i.f. imports). The usual method <strong>of</strong> trade weighting yields unrealistic results in this case because, for price gaps exceeding 100 percent, the implied tariff revenues are larger than the value <strong>of</strong> c.i.f. imports <strong>and</strong> not a realistic estimate <strong>of</strong> the value <strong>of</strong> NTM rents, which must be a share <strong>of</strong> the value <strong>of</strong> imports. H-10
Estimation <strong>of</strong> <strong>Effects</strong> <strong>of</strong> Removal <strong>of</strong> Domestic Support The estimated effects <strong>of</strong> <strong>India</strong>n domestic support rely on the work <strong>of</strong> the World Bank’s Agricultural Distortions Project, which calculated the value <strong>of</strong> this support on an annual basis for the period 1984–2004. Commission staff converted the results into a form compatible with the GTAP model. 20 The support in question lowers the prices <strong>of</strong> fuel, electricity, <strong>and</strong> fertilizer paid by <strong>India</strong>n producers. In 2004 the total value <strong>of</strong> support payments for 11 crops was $5.9 billion for fertilizer <strong>and</strong> $1.9 billion for electricity. Most <strong>of</strong> this support was for rice <strong>and</strong> wheat. Rice received 37.1 percent <strong>of</strong> the value <strong>of</strong> input support in 2004, amounting to 15.4 percent <strong>of</strong> the international reference price <strong>and</strong> 18.3 percent <strong>of</strong> the domestic price. Wheat received 35.2 percent <strong>of</strong> the value <strong>of</strong> input support, amounting to 18.9 percent <strong>of</strong> the international reference price <strong>and</strong> 27.2 percent <strong>of</strong> the domestic price. 21 The magnitude <strong>of</strong> these payments has been relatively stable in recent years. 22 <strong>India</strong>n farmers also receive discounted water from canal irrigation schemes, as well as discounted credit <strong>and</strong> exemption from income taxes. 23 Commission staff estimated the effects on U.S. exports <strong>of</strong> removing <strong>India</strong>n domestic support for certain crops. The estimated effect on U.S. exports <strong>of</strong> removal <strong>of</strong> <strong>India</strong>n support payments for electricity <strong>and</strong> fertilizer ranges from $11.7 million to $19.0 million, an increase <strong>of</strong> 3–5 percent from the 2007 baseline (table H.3). These effects are largely related to increased U.S. exports <strong>of</strong> plant-based fibers, primarily cotton. GTAP simulation <strong>of</strong> the economic effects <strong>of</strong> removal <strong>of</strong> support for electricity, fuels, <strong>and</strong> fertilizer was performed by replacing the st<strong>and</strong>ard GTAP base data for <strong>India</strong>n support with estimates based on the Agricultural Distortions project, which are better documented <strong>and</strong> more reliable. The estimates include a sensitivity analysis with respect to elasticities similar to that used in the estimates <strong>of</strong> tariff effects in Chapter 5 <strong>and</strong> NTM effects in Chapter 6. 20 For the main results <strong>of</strong> the project for <strong>India</strong>, see Pursell, Gulati, <strong>and</strong> Gupta, “Distortions to Agricultural Incentives in <strong>India</strong>,” December 2007. For the overall method for the project, which was applied to multiple countries, see Anderson et al., “Measuring Distortions to Agricultural Incentives, Revisited,” April 2008. For the documentation for the GTAP-compatible results, see Valenzuela <strong>and</strong> Anderson, “Alternative Agricultural Price Distortions for CGE Analysis <strong>of</strong> Developing Countries, 2004 <strong>and</strong> 1980–84,” December 2008. 21 Pursell, Gulati, <strong>and</strong> Gupta, “Distortions to Agricultural Incentives in <strong>India</strong>,” December 2007. 22 Anderson <strong>and</strong> Valenzuela, “Estimates <strong>of</strong> Global Distortions to Agricultural Incentives, 1955 to 2007.” The effects are expressed as output subsidy equivalents. 23 Pursell, Gulati, <strong>and</strong> Gupta, “Distortions to Agricultural Incentives in <strong>India</strong>,” December 2007. H-11
Page 1 and 2:
United States International Trade C
Page 3 and 4:
U.S. International Trade Commission
Page 5:
Abstract This report describes <str
Page 8 and 9:
TABLE ES.1 India:
Page 10 and 11:
U.S. agricultural products face str
Page 12 and 13:
U.S. Foreign Direct Investment U.S.
Page 15 and 16:
CONTENTS Page Abstract ............
Page 17 and 18:
CONTENTS―Continued Chapter 6 <str
Page 19 and 20:
CONTENTS―Continued Figures 1.1. <
Page 21 and 22:
ACRONYMS AND TERMS AAY Antodaya Ann
Page 23:
ACRONYMS AND TERMS—Continued RGGV
Page 26 and 27:
TABLE 1.1 India: A
Page 28 and 29:
FIGURE 1.1 India:
Page 30 and 31:
India’s central
Page 32 and 33:
Despite their weak economic pr<stro
Page 34 and 35:
Approach Current India</str
Page 36 and 37:
Bibliography Birner, Regina, Surupt
Page 38 and 39:
World Bank. Agriculture for Develop
Page 40 and 41:
FIGURE 2.1 India:
Page 42 and 43:
TABLE 2.1 India: A
Page 44 and 45:
FIGURE 2.3 India:
Page 46 and 47:
premium); (2) India</strong
Page 48 and 49:
include government export restricti
Page 50 and 51:
TABLE 2.3 India: A
Page 52 and 53:
FIGURE 2.6 India:
Page 54 and 55:
Exports by Major Trading Partner <s
Page 57 and 58:
CHAPTER 3 Domestic Consumption Over
Page 59 and 60:
TABLE 3.2 India: P
Page 61 and 62:
more likely to have been exposed to
Page 63 and 64:
BOX 3.3 Indian Con
Page 65 and 66:
TABLE 3.3 India: T
Page 67 and 68:
are expected to see income growth <
Page 69 and 70:
Food Preferences India</str
Page 71 and 72:
Regional Variation Geographic <stro
Page 73 and 74:
CCC. “Know India
Page 75 and 76:
CHAPTER 4 Indian A
Page 77 and 78:
For most crops, however, In
Page 79 and 80:
The Farm Sector soybeans 29 —but
Page 81 and 82:
Food processing in India</s
Page 83 and 84:
BOX 4.1 The Central Government’s
Page 85 and 86:
BOX 4.2 Does the Minimum Support Pr
Page 87 and 88:
August 3, 2009, New Delhi announced
Page 89 and 90:
known as zamindars, have doubled or
Page 91 and 92:
that the PFA Act was strictly enfor
Page 93 and 94:
———. Bharat Nirman: A Time-Bo
Page 95 and 96:
Organisation for Economic Co-operat
Page 97 and 98:
CHAPTER 5 TARIFFS Overview
Page 99 and 100:
sensitive. They include vegetable f
Page 101 and 102:
wholly milled rice and</str
Page 103 and 104:
The Indian governm
Page 105 and 106:
India also reporte
Page 107 and 108:
Reference Prices Reference prices,
Page 109 and 110:
Landing Fees <stro
Page 111 and 112:
Simulated Effects
Page 113 and 114:
and nuts” by $0.
Page 115 and 116:
5-19 TABLE 5.4 India</stron
Page 117 and 118:
Bibliography Acharya, Keya. “Thor
Page 119 and 120:
Indian Express.com
Page 121 and 122:
CHAPTER 6 Nontariff</strong
Page 123 and 124:
foreign sources. 6 For example, SPS
Page 125 and 126:
BOX 6.1 Milk and M
Page 127 and 128:
BOX 6.2 Wheat—Continued Yet, <str
Page 129 and 130:
perpetuated continuously. The impor
Page 131 and 132:
notices that must be integrated wit
Page 133 and 134:
import corn under the TRQ is too bu
Page 135 and 136:
Customs Procedures India</s
Page 137 and 138:
Corruption Interests within <strong
Page 139 and 140:
TABLE 6.2 India: E
Page 141 and 142:
Bibliography American Apparel <stro
Page 143 and 144:
Mattson, Jeremy W., Won, W. Koo, <s
Page 145:
———. 2009 National Trade Esti
Page 148 and 149:
TABLE 7.1 India: C
Page 150 and 151:
First Point of Sal
Page 152 and 153:
Private mandis Som
Page 154 and 155:
approximately 65 million households
Page 156 and 157:
7-10 TABLE 7.2 India</stron
Page 158 and 159:
poor communications infrastructure
Page 160 and 161:
limited popularity with farmers bec
Page 162 and 163:
The lack of infras
Page 164 and 165:
found that 39 percent of</s
Page 166 and 167:
Bibliography Banerjee, A. Dairying
Page 168 and 169:
Tiwari, Shri Rajendra Kumar. “Pos
Page 170 and 171:
FDI Regulations and</strong
Page 172 and 173:
TABLE 8.2 India: A
Page 174 and 175:
Food Processing and</strong
Page 176 and 177:
There is not necessarily a strong l
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 and 222:
advertising and pr
Page 223 and 224:
highest in the Asia-Pacific region.
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
Page 254 and 255: efrigeration. This characteristic i
Page 256 and 257: 70 percent of tota
Page 258 and 259: eportedly preferred in southern <st
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. “
Page 273 and 274: Simulation Framework The effects <s
Page 275 and 276: Producers determine the optimal sup
Page 277 and 278: Applied ad valorem tariff equivalen
Page 279: We considered the possibility that
Page 283 and 284: Bibliography Anderson, Kym, Mariann
show all

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

Create successful ePaper yourself

Delete template?

Save as template?