U.S. axes trade benefits for Brazil, India, others

WASHINGTON (Reuters) - The United States is terminating some trade benefits for India, Brazil and other developing countries under a program revamped late last year by Congress, the White House said on Thursday.

President George W. Bush issued a proclamation implementing the changes to the Generalized System of Preferences program, which provided U.S. duty-free access for $32.6 billion worth of goods from developing countries in 2006.

The decision came just one week after an acrimonious meeting in Potsdam, Germany, between the United States, the EU, Brazil and India that failed to produce a long-awaited breakthrough in world trade talks.

U.S. officials accused the two leading developing countries of making impossible demands for cuts in U.S. farm subsidies, while refusing to substantially open their own markets to more U.S. farm and manufactured goods.

However, the action has its roots in a bill approved by Congress in December which provided new guidelines for determining whether a particular product is eligible for duty-free treatment under the GSP program.

Those reforms were motivated by frustration in Congress over Brazil and India's role in the trade talks, and were aimed at eliminating GSP eligibility for products where developing countries had shown they could compete without assistance.

BRAKES, GOLD JEWELRY AND BRASS LAMPS

The decision announced on Thursday means Brazil will no longer be able to ship brakes, brake parts and ferrozirconium to the U.S. market without paying U.S. import duties, the U.S. Trade Representative's office said in a statement.

The United States also is revoking duty-free status for gold jewelry and brass lamps from India, methanol from Venezuela, wiring harnesses from the Philippines, gold jewelry from Thailand and kola nuts from Ivory Coast.

India shipped $1.6 billion in gold jewelry and $20 million in brass lamps to the United States under the GSP program in the first 10 months of 2006, USTR said when it initiated its review last year.

Brazil shipped $242 million in brake and brake parts and $700,000 in ferrozirconium in the same period, USTR said.

Indian Commerce Minister Kamal Nath, who has been in Washington for talks with U.S. officials, said on Thursday there could be consequences if the United States cut benefits.

"We will take note ... if and when the moment comes. We'll remember it wasn't extended," Nath said.

Sen. Charles Grassley, an Iowa Republican who pushed hard for the changes, praised the Bush administration's action.

"I'm increasingly questioning why we provide preferential treatment at all to products from countries such as Brazil, India, and Venezuela ... (which) have actively worked against the trade interests of the United States," Grassley said.

The revamped GSP program allows the Bush administration to revoke duty-free treatment when imports of a certain good from one country exceed an annual cap of about $187.5 million, or comprise 75 percent of total U.S. imports of that good.

U.S. trade officials said they terminated eligibility for 21 products as a result of their review, but maintained eligibility for 115 exports from countries whose trade exceeded statutory limits in 2006.