India has said a new American law, calling for 100% scanning of US-bound containers at all foreign ports, would lead to an increase in transaction costs and severely harm exports to US from the country.
Although security concerns are the intention behind the US law, India is treating it as a non-tariff barrier (NTB). Official sources said, the matter was discussed recently by US trade representative Susan Schwab and commerce and industry minister Kamal Nath. Owing to overall good trade relations with the US, India is trying to settle the matter bilaterally, rather than taking it to the WTO.
Worried that the law would be a blow to Indian exports to the US, the commerce and revenue departments said it is impractical due to enforcement difficulties. If the US insists on its implementation citing security risks, India would ask for it to be done on a reciprocal basis. The law says, effective from July 2012, maritime cargo containers to be imported into the US should be 100% scanned at foreign ports using radiation detection and non-intrusive imaging equipments, prior to loading onto a vessel. Failure to conform to this would result in denial of entry to those shipments into the US.
It has put around 600 ports across the world in a spot of bother. Besides India, trading partners of the US, including Brazil, Argentina, South Africa, European Union nations, Canada and Japan have also reportedly raised reservations. Industry estimates say around $500 billion of the global trade with the US would be impacted by this law.
India?s exports to the US in 2006-07 were $18.87 billion, an 8.72% increase over 2005-06. This was much lower than the 26% growth in 2005-06 over 2004-05. The share of exports to US to that of India?s total exports has also fallen from 16.8% in 2005-06 to 14.9% in 2006-07.
