US Ending trade benefits for India
U.S. President Donald Trump issued a proclamation ending the trade benefits effective June 5. Earlier, Mr. Trump had notified the U.S. Congress on March 4 of his intention to end benefits for India for market access reasons, and this led to start of 60 day statutorily mandated notification period.
However, benefits could possibly be reinstated subject to India and the U.S. reaching an agreement, according to a senior State Department official.
What is GSP?
The GSP (Generalised system of preferences) is a programme that seeks to aid developing countries by giving some of their products non-reciprocal, duty free access to U.S. markets. In 2018, some $ 6.3 billion of Indian merchandise exports to the U.S. were covered by GSP, as per the Congressional Research Service.
This represented 11% of all merchandise from India. India was the largest beneficiary of the programme, accounting for over one quarter of all the U.S.’s GSP-covered imports.
The U.S. Trade Representative (USTR) began a review of India’s eligibility for GSP in April 2018. The U.S. medical devices and dairy industries had made representations on market access issues in India. Tariffs in the ICT sector had also become an irritant in ties.
Criteria for GSP
There are eight mandatory and seven discretionary criteria for GSP eligibility. Mandatory criteria include a beneficiary not being a communist country and committing to end the worst forms of child labour. Discretionary criteria include the level of economic development (i.e, the Turkey case), and assurances on market access (i.e., the India case).
Oppositio from within US
The Coalition for GSP, an industry body, was not supportive of the measure, saying it would cost American companies $300 million in additional annual tariffs.