US plans to end preferential trade status for India under a scheme which allows certain products to enter the country duty-free
Washington: US President Donald Trump has announced that he is ending India’s $5.6 billion trade concessions under the Generalised System of Preferences programme, accusing New Delhi of not providing Washington “equitable and reasonable access” to its markets.
Trump, who is on a mission to expand market access abroad and end trade deficits, made the announcement on Monday in a letter to House Speaker Nancy Pelosi and Vice President Mike Pence in his capacity as the Senate President. The US Trade Representative’s Office said that the preferences will end in 60 days after the notification to Congress and the Indian government.
Meanwhile, Trump said that he will continue to monitor if India is “providing equitable and reasonable access to its markets” and meet the GSP eligibility criteria.India had opposed proposals to end the GSP saying that it would be “discriminatory, arbitrary” and hurt the country’s development.
India is the largest beneficiary of the GSP and is exporting goods worth $5.6 billion to the US under the programme. Congress establishes the conditions of eligibility for GSP, which include “providing the US with equitable and reasonable market access, protecting workers’ rights and combating child labour”.
Trump wrote in his letter: “I am taking this step because, after intensive engagement between the US and the government of India, I have determined that India has not assured the US that it will provide equitable and reasonable access to the markets of India.”
The USTR said: “India has implemented a wide array of trade barriers that create serious negative effects on US commerce”, but did not mention the specifics in its statement. The total India-US trade was $126.2 billion in 2017, with a $27.3 billion deficit for the US, according to the USTR. India’s total exports were worth $76.7 billion and the end to GSP affects only a small part of it, limited to $5.6 billion.
The primary aim of the GSP is to help developing countries, particularly in sectors where the benefits can reach the poor. Trump also said that he was ending the GSP for Turkey because of its economic success and rising living standards that would no longer make it eligible for the programme that is meant to help developing countries.
The President has been on a warpath against what he said were high tariffs on US imports to India. While pushing for the Reciprocal Trade Act in January, he brought up India’s duty on American whiskey, which he said was 150 per cent and on Harley Davidson motorcycles that he asserted he had gotten reduced from 100 to 50 per cent.