Senators ask India to give market access to US farm products

Senate Finance Committee Chairman Max Baucus and ranking member Chuck Grassley asked the Obama administration to step up efforts to remove these barriers through vigorous trade negotiations and increased trade facilitation.
The report prepared at the request of the Senate Finance Committee says US farmers and food makers are losing millions of dollars each year in lost sales because of India's tariffs and non-tariff measures which raise the cost or prohibit farm exports to the country.
The report, India: Effects of Tariffs and Non-Tariff Measures on US Agricultural Exports, was released by the US International Trade Commission, an independent, non-partisan fact-finding federal agency, here yesterday.

The report notes that US agriculture exports to India are minimal, with India receiving less than 0.5 per cent of US agricultural exports in 2008, despite the country's growing middle class and 1.2 billion potential consumers of American products.
"Indian tariff rates on agricultural products, averaging 114 per cent, are among the highest in the world. The majority of rates are between 50 and 150 per cent, much higher than the average bound rates for other major developing countries such as Brazil and China," it said.

The Finance Committee Chairman said the Indian market held tremendous potential for US agricultural exporters.
Baucus in a statement asked the USDA and USTR to redouble their efforts to remove these barriers.
Ranking Member Chuck Grassley alleged India imposed many barriers to imports of US agricultural products.
"For example, the United States can’t export corn to India in any large volumes because of high tariffs. There’s an effective ban on imports of agricultural biotech products," the Senator from Iowa said.

Noting that licensing procedures are burdensome, Grassley said, "negotiators need to continue working to increase market access for US farm products in the Indian market. The demand is growing. US producers are ready to meet that demand."
The report noted that though average applied farm tariff rates have declined significantly from 113 per cent in 1991, prior to liberalisation, to about 34 per cent in 2007, yet they remain among the highest globally.

The gap between high bound rates and lower applied rates allows India to vary its tariff rates frequently and substantially on some commodities, which creates uncertainty for US agricultural exporters, it said.
Despite the size of the Indian market, inefficiencies in its marketing and distribution system due to high government interventions, poor quality and inadequate infrastructure, make it less attractive for US farm producers, USITC said.