The United States will restore India’s benefits under the Generalized System of Preferences (“GSP”) as part of the deal. The GSP program eliminates duties on a range of products for certain developing countries designated by the United States. President Trump removed India from the program in June 2019, citing various trade barriers and market access issues faced by U.S. companies in India. India’s benefits under the program are valued at $6.4 billion.

Also as part of the deal, India will (1) remove price controls on medical devices, including heart stents and knee implants, (2) improve market access for agriculture and dairy products, and (3) add intellectual property protections. The agricultural products benefiting from greater market access include almonds, cherries, pork, hay, and dried grains. The benefits accruing to the United States from these commitments will match the $6.4 billion benefit India would gain under the GSP program.

Both sides hope to incorporate tariff reductions, which could include reductions for duties on U.S. information and communication technology goods and Harley-Davidson motorcycles. It is unclear at this point if U.S. duties on Indian steel and aluminum under Section 232 will be affected.

Although this pact is relatively limited in scope, it represents the first step towards a more comprehensive trade agreement between the two nations.

The SCM Agreement classifies subsidies under two categories: prohibited or actionable. Prohibited subsides include export subsidies—receipt of benefits is contingent, in whole or in part, upon export performance—and local content subsidies—receipt of benefits is contingent, whole or in part, upon the use of domestic over imported goods. In contrast, actionable subsidies are not prohibited but are subject to challenges if they adversely affect a WTO member. In the decision handed down Thursday, each of the subsidies was determined to be a prohibited export subsidy.

Based on its findings over the course of the proceeding, the WTO dispute panel concluded that the withdrawal of the aforementioned subsidies would require amendments to India’s Foreign Trade Policy, central government notifications, and operational procedures, actions that may also necessitate review by the Indian Parliament. As a result of these facts and a review of each level of government associated with the prohibited programs, the WTO dispute panel gave India: 90 days to withdraw DFIS; 120 days to withdraw the EOU and related sector-specific schemes, EPCG scheme, and MEIS; and 180 days to withdraw the SEZ schemes.

The full WTO dispute panel report can be read here.

Over the last several years, India has joined three of the four major multilateral export control regimes – the Missile Technology Control Regime (MTCR), the Wassenaar Arrangement, and the Australia Group. In response to India’s ascension to these agreements, the United States has amended the Export Administration Regulations (EAR) to ease export control license requirements for exports and reexports of qualifying items to India.

Earlier this year, the Bureau of Industry and Security (BIS) lifted license requirements for exports and reexports of “CB2” controlled items to India, including fluid handling equipment controlled under Export Control Classification Number 2B350 and chemicals controlled under ECCN 1C350, as a result of India’s ascension to the Australia Group. This move eased restrictions on many fluid handling companies that produce controlled equipment, as they may more easily transfer products and share data between operations in India and the United States.

Last week, BIS lifted licensing requirements for transfers of items controlled for “NS2” reasons to India, including a broad array of optical equipment, lasers, sensors, electronic components, and materials, reflecting India’s status as a participant in the Wassenaar Arrangement. The amendment also allows exporters to more broadly use License Exception Strategic Trade Authorization (STA) to export more sensitive items controlled for national security purposes to India without a license. Although license exception STA involves a number of administrative steps, once an STA program is set up, it can be far more efficient to use than obtaining individual licenses from BIS for each export.

The exclusion order covers stainless steel products manufactured by or on behalf of Viraj, including semi-finished steel, wire rod, bars, angles, wire, flanges and fasteners. The order also applies to stainless steel produced by Viraj that may be sold by other parties, as well as products produced by Viraj made from stainless steel billets and ingots that are melted, refined, and cast by an unrelated third-party.