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

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FIGURE 2.3 <strong>India</strong>: Agricultural imports from the United States by product share, 2006–08 average All other 19% Misc. processed foods 2% Hides <strong>and</strong> skins 2% Soybean oil 3% Apples 4% Almonds 36% Peas 15% Cotton 19% Average total imports $418 million Source: GTIS, World Trade Atlas Database (accessed June 8, 2009). 80 percent <strong>of</strong> <strong>India</strong>n palm oil imports are sourced from Indonesia, with the remainder mostly supplied by Malaysia (fig. 2.4). For soybean oil, Argentina is the largest supplier to the <strong>India</strong>n market, accounting for 76 percent <strong>of</strong> <strong>India</strong>n soybean oil imports during 2006–08, followed by Brazil with 18 percent. During this period, the United States accounted for only 2 percent <strong>of</strong> <strong>India</strong>’s soybean oil imports. 16 <strong>India</strong>n buyers reportedly buy soybean oil principally on the basis <strong>of</strong> price, <strong>and</strong> in recent years, Argentine soybean oil was priced lower than the U.S. product (box 2.1). 17 After vegetable oils, the largest agricultural import category is pulses (table 2.1), which accounted for 14 percent <strong>of</strong> all agricultural imports during 2006–08. 18 Even though <strong>India</strong> is a large producer <strong>of</strong> pulses, dem<strong>and</strong> exceeds domestic supply, <strong>and</strong> <strong>India</strong> is now the leading importer <strong>of</strong> pulses in the world. 19 Imports receive favorable tariff treatment but face certain SPS requirements associated with fumigation. 20 During 2006–08, the United States accounted for 6 percent <strong>of</strong> <strong>India</strong>n pulse imports. U.S. government <strong>and</strong> industry sources attribute the relatively low U.S. share to competitive factors that favor other suppliers: (1) lower prices (U.S. pulses tend to be high quality <strong>and</strong> comm<strong>and</strong> a price 16 From 2005 to 2007, U.S. soybean oil producers have shipped $11–20 million <strong>of</strong> refined soybean oil annually to <strong>India</strong> <strong>and</strong> much less crude soybean oil, which is notable primarily because <strong>of</strong> <strong>India</strong>’s long-time desire to import crude edible oils as feedstock for their underutilized refining capacity. Government <strong>of</strong>ficials, interview by Commission staff, New Delhi, <strong>India</strong>, May 26, 2009; industry representatives, interviews by Commission staff, Mumbai, <strong>India</strong>, May 28, 2009; <strong>and</strong> industry representative, interview by Commission staff, Mumbai, <strong>India</strong>, June 1, 2009. 17 Industry representative, interview by Commission staff, Mumbai, <strong>India</strong>, May 28, 2009. 18 Pulses play an important role in the <strong>India</strong>n diet <strong>and</strong> are the major protein source for a large segment <strong>of</strong> the population. Aradhey, <strong>India</strong>: Grain <strong>and</strong> Feed; Pulses Situation <strong>and</strong> Outlook, December 14, 2007. 19 GTIS, World Trade Atlas Database (accessed June 8, 2009). 20 Aradhey, <strong>India</strong>: Grain <strong>and</strong> Feed; Pulses Situation <strong>and</strong> Outlook, December 14, 2007. See chapter 6 for more details. 2-6
FIGURE 2.4 <strong>India</strong>: Major agricultural imports by trading partner, 2006–08 average Indonesia Malaysia Thail<strong>and</strong> Other Argentina Brazil United States Other Canada United States Australia France Other Côte d'Ivoire Guinea-Bissau Benin Tanzania Indonesia Other Burma Australia China Tanzania Other 1,390 Palm oil Soybean oil Peas Cashews Beans 0 100 200 300 400 500 600 Million $ Source: GTIS, World Trade Atlas Database (accessed June 8, 2009). BOX 2.1 Soybean Oil __ <strong>India</strong> is one <strong>of</strong> the largest edible oil markets in the world, <strong>and</strong> domestic producers are unable to satisfy <strong>India</strong>n dem<strong>and</strong>. Several factors—soybean industry fragmentation; government policies that encourage small-scale activity <strong>and</strong> favor grain production instead <strong>of</strong> oilseed production; marketing <strong>and</strong> distribution inefficiencies; <strong>and</strong> irregular water supplies—negatively affect vegetable oil production in <strong>India</strong>. a As a result, <strong>India</strong> imports roughly one-half <strong>of</strong> its annual consumption. With <strong>India</strong>’s lagging domestic supply, low tariffs, <strong>and</strong> few specific nontariff measures, U.S. soybean oil producers could be in a good position to supply the <strong>India</strong>n market except for two cost factors: prices for soybean oil substitutes <strong>and</strong> a global competitor’s export tax structure. <strong>India</strong> satisfies the overwhelming share <strong>of</strong> its vegetable oil import needs with low-cost palm oil from Indonesia <strong>and</strong> Malaysia because the <strong>India</strong>n vegetable oil market is fairly price sensitive. When <strong>India</strong> does import soybean oil, it turns first to Argentine <strong>and</strong> Brazilian sources, as those producers have certain shipping cost <strong>and</strong> seasonal advantages. Consequently, despite <strong>India</strong> lowering its tariffs to encourage additional edible oil imports in 2008, U.S. soybean oil exports to <strong>India</strong> have fallen to almost zero. b More important for U.S. soybean processors, however, is Argentina’s use <strong>of</strong> a differential export tax scheme, which taxes raw soybean exports at a higher rate (35 percent) than soybean oil exports (32 percent). Although the tax on Argentine soybean oil exports raises their price on world markets, taxing raw material exports at a higher rate than processed product exports results in an export subsidy for Argentina’s oilseed processors. This export subsidy confers a competitive advantage for this commodity product over U.S. soybean oil in the <strong>India</strong>n market. c ______________ a NOPA, written submission to the USITC, April 1, 2009; industry representative, e-mail message to Commission staff, June 24, 2009. b In early 2009, because <strong>of</strong> the increase in U.S. soybean oil stocks, the decrease in U.S. soybean oil usage, <strong>and</strong> the dearth <strong>of</strong> supply in South America, U.S. soybean oil producers recorded sales to <strong>India</strong> <strong>of</strong> 60,000 tons. Industry representative, telephone interview by Commission staff, May 1, 2009. c NOPA, written submission to the USITC, April 1, 2009. 2-7
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 46 and 47: premium); (2) India</strong
Page 48 and 49: include government export restricti
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
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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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TABLE 8.2 India: A
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Food Processing and</strong
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There is not necessarily a strong l
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For processing of
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BOX 8.3 Restrictions on Foreign Joi
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Under certain circumstances, FDI ca
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commenced. States tend to be quick
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Bibliography Bahn, Niti, an
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International Center for Alcohol Po
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Structure of the <
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BOX 9.1 The UPOV System for Plant V
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that the public sector in I
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Whether this situation will soon ch
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The U.S.-India Bus
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eggplant, which began field trials
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Maskus, Keith E. “Intellectual Pr
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APPENDIX A REQUEST LETTER
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The Honorable Sham L. Arano
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cprice-sewell on PRODPC61 with NOTI
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APPENDIX C HEARING WITNESSES
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ORGANIZATION AND WITNESS: Tuttle Ta
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Summary of Views <
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advertising and pr
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highest in the Asia-Pacific region.
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to U.S. exports to India</s
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transparent sanitary regulations th
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hotel and catering
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Western Pistachio Association 26 In
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APPENDIX E POTENTIAL FOR U.S. AGRIC
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E-4 TABLE E.1 India</strong
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APPENDIX F INDIAN AGRICULTURAL PROD
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TABLE F.1 India: A
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FIGURE F.1 India:
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is in nonirrigated areas with yield
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Consumption India
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efrigeration. This characteristic i
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70 percent of tota
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eportedly preferred in southern <st
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Cotton During MY 2003/04-2007/08, <
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Government of <str
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APPENDIX G UNION AND STATE/UNION TE
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certain agricultural goods in the p
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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
Page 283 and 284:
Bibliography Anderson, Kym, Mariann
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