TheUnited
Stateson formally terminatedIndia’s eligibility for a
duty-free import schemefor developing countries on31 May.It
cited thatIndia
has not given assurancesit will provide equitable and
reasonable access to its markets to US companies as required under relevant
American trade laws. The US President Donald Trump has said the country wouldend its preferential trade
treatmentfor India onJune 5.
India-The
biggest beneficary:
Notably, India is the biggest beneficiary of the
US’Generalized System
of Preferences (GSP).It sold an estimated$6.3 billion worthof
goods to the United States under this program in 2018.
Background:
President Trump had conveyed is an intention to
terminate India’s eligibility for the programme, Generalized System of
Preferences (GSP), to the US Congress onMarch 4. And the formal termination
became due on May 4, after the mandatory 60-day notice period.
But the administration held off on the
proclamation as India was in the middle of elections at the time and there was
pressure from US lawmakers, from both parties, to delay the termination to
allow more time for negotiations. There was an expectation that India could
avert the termination.
But the Trump administration had concluded much
before, according to people close to the developments, that India would not be
able to deliver no matter how much additional time it was given.
What
is Generalized System of Preferences (GSP)?
TheGeneralized
System of Preferences (GSP)is a U.S. trade program
designed to promote economic growth in the developing world by providing
preferential duty-free entry for up to 4,800 products from 129 designated
beneficiary countries and territories. GSP was instituted on January 1, 1976,
by the Trade Act of 1974
The GSP program has effective dates which are
specified in relevant legislation, thereby requiring periodical reauthorization
in order to remain in effect
GSP expired on July 31, 2013, and was most
recently reauthorized on June 29, 2015 (effective July 29, 2015) for a period
of two and a half years. The relevant legislation permits retroactive
extension of GSP benefits. Recently the USA has excluded India from the list of
beneficiaries of this program
