The Trump administration yesterday opened hostilities in a pair of new trade wars, using India’s price caps on coronary stents and knee implants as the centerpiece of the new policy there.
The White House said it plans to end India’s preferential trade status in 60 days under the Generalized System of Preference.
“India’s termination from GSP follows its failure to provide the United States with assurances that it will provide equitable and reasonable access to its markets in numerous sectors,” U.S. trade representative Robert Lighthizer wrote yesterday, rebuffing India’s proposal to open up its agriculture market to U.S. firms. “Despite intensive engagement, India has failed to take the necessary steps to meet the GSP criterion.”
Caps enacted by India’s National Pharmaceutical Pricing Authority on knee implants and cardiac stents are at the core of the dispute, having caused major medtech players to seek to withdraw their devices from the market there. In April 2017, the NPPA rejected applications from Medtronic (NYSE:MDT) and Abbott (NYSE:ABT) to pull their respective Resolute Onyx and Absorb stents (Abbott has since taken Absorb off the global market, citing lackluster sales). The NPPA is already considering further caps for other medical devices.
At some 2,000 products worth a collective $5.6 billion, or roughly 12% of exports to the U.S., India is the largest trade partner under the GSP. Removing protections from those products would subject them to higher tariffs, but government officials in India estimate that losing GSP status would amount to only $200 million to $250 million in increased tariffs, according to the Times of India.
“We just have to take it on the chin and move on,” an anonymous official told the newspaper.
Lighthizer said the U.S. also plans to withdraw GSP status from Turkey, following “a finding that it is sufficiently economically developed and should no longer benefit from preferential market access to the United States market.”