India and the US are headed for a major row over Indian religious sentiments attached to the cow, for which US-origin dairy products are banned in the country. The issue is not new, but the Donald Trump Administration is using the ban to review benefits given to Indian products under the US General System of Preferences (GSP) scheme. GSP provides duty-free access to about 3,500 Indian products to US markets.
Trump’s reasons are political. The US dairy industry has lobbied hard through a strong representation before the US Trade Representative (USTR), asking him to “suspend India’s eligibility for GSP” specifically because it does not provide US dairy products “reasonable and equitable access” to its market. The decision to prohibit US dairy products was taken in 2003 by the Vajpayee government.
Initially, India skirted around the main issue by altering labelling standards, pesticide values and other detail but eventually conveyed its true concern, which was religious and cultural. The problem is with animal feed to cows in the US that contains ruminantorigin products and blood, while the cow in India is sacred and strictly vegetarian.
“India continues to require that dairy products be derived from animals which have never consumed any feeds containing internal organs, blood meal, or tissues of ruminant origin. India has explained that its position is based on religious and cultural grounds,” the 2018 US National Trade Estimate Report has said.
To get around the problem, the US proposed a ‘labelling solution’ in 2015, after Prime Minister Narendra Modi assumed office. This entailed labelling a ‘red dot’ sticker to denote ‘non-vegetarian’ for dairy products derived from animal that have consumed feeds with ruminant proteins. India has so far rejected the suggestion on grounds that feeding ruminant proteins, those derived from intestinal organs of animals, to cows deeply hurts and violates Indian religious and cultural sentiments.
After the US got New Delhi to back off at WTO on not allowing US companies to sell frozen chicken in India, the US has decided to challenge it on the ban on dairy products too. On Tuesday, the US Dairy Export Council (USDEC) handed over detailed comments USTR sought on the issue and has even requested to testify at a hearing on India’s nontariff barriers on June 19.
“India…presents are large and unrealized market opportunity for the US dairy industry. USDEC has estimated that a resolution of this issue could yield additional exports ranging from $30 mn to $100 million…depending on the nature of the resolution and the growth in the Indian market over the next few years,” the council wrote in its June 5 letter to USTR.
The powerful US National Milk Production Federation had joined hands with USDEC to mount a potent lobbying offensive, asking the Trump Administration to stop granting benefits to India until it accepts the labelling solution. In the context of a 14-year ban, the lobby has asked for withdrawal of GSP benefits. “India should not continue to receive unilateral GSP benefits so long as it continues to block US dairy exports,” the letter states.
Washington has through diplomatic channels conveyed to New Delhi that it has been forced to order a review of India’s GSP benefits after repeated representations from the dairy industry. On its part, India has told the US that it would simply have to respect Indian religious and cultural sentiments on the issue. The matters remains unresolved as the USTR has started its review.