USTR removes India from developing country list

Amends the lists of developing and least developed countries eligible for preferential treatment with regard to countervailing duty investigations

The US government changed an administrative rule that made it easier to impose countervailing duties (CVDs) on goods from India and certain other countries.

The Office of the United States Trade Representative (USTR) has issued a notice amending the lists of developing and least-developed countries eligible for preferential treatment in countervailing duty investigations.

Ranking of countries

In order to harmonize US law with the Agreement on Subsidies and Countervailing Measures (SCM) of the World Trade Organization (WTO), the USTR had, in 1998, established lists of countries classified according to their level of development. . These lists were used to determine whether they were potentially subject to US countervailing duties. The 1998 rule is now “obsolete” in the opinion of the USTR.

Countries that are not given special attention have lower levels of protection against cardiovascular investigation.

A countervailing duty investigation must be terminated if the subsidy complained of is de minimis (too small to be of concern) or if import volumes are negligible.

The de minimis import volume thresholds and allocation are more flexible for developing and least developed countries.

India was, until February 10, on the list of developing countries and therefore eligible for these more flexible standards. It has now been removed from this list.

The new lists include 36 developing countries and 44 least developed countries.

The de minimis standard is generally a subsidy of 1% or less ad valorem and 2% for special cases.

If a country’s goods represent less than 3% of all imports of those goods into the United States, they meet the “negligible import volume” standard. For special cases, it is 4%. Imports do not meet the standard though, individual volumes are less than 3% (special cases: 4%) but the overall volume of imports to the United States is 7% of all these goods.

The USTR used the following criteria to determine whether a country was eligible for the 2% de minimis standard: (1) gross national income or GNI per capita (2) share of world trade (3) other factors such as Organization for Economic Co-operation Membership in Operations and Development (OECD) or membership application, EU membership and membership in the Group of Twenty (G20).

India, as well as Brazil, Indonesia, Malaysia, Thailand and Vietnam were removed from the list because they each hold at least 0.5% of world trade, despite having a GNI of less than $ 12,375 ( the World Bank threshold separating high income countries from others). India was also removed from the list because, like Argentina, Brazil, Indonesia and South Africa, it is part of the G20. “Given the global economic importance of the G20 and the collective economic weight of its members (who represent a significant share of global economic production and trade), membership of the G20 indicates that a country is developed,” said the USTR opinion.

Not related to Trump’s visit

US President Donald Trump has repeatedly complained about the classification of developing countries by the WTO. On July 26, he sent a memorandum to USTR entitled “Reforming the Status of Developing Countries within the World Trade Organization”. In it, Mr. Trump called on the USTR, among others, to “no longer treat as a developing country for the purposes of the WTO any WTO Member who, according to the USTR, wrongly declares itself developing country ”, if the WTO had not changed its approach to the flexibilities associated with developing country status within ninety days of the publication of the memorandum.

Mr Trump is due to visit India on February 24 and 25, and the United States and India are trying to finalize a trade deal before the American president arrives. Timing of USTR announcement is unrelated to visit, former trade official said The Hindu.

“The timing is mostly a coincidence and mainly linked to the momentum at the WTO on the treatment of developing countries,” the official said.

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