Trump says to end preferential trade status for India; New Delhi shrugs off threat

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In what could impact India’s $5.6 billion worth of exports to the US, President Trump has said the United States may end India’s preferential trade treatment under a programme, but New Delhi shrugged off the threat saying the ipact would be minimal and that it would continue to engage with Washington to resolve the issue.

Trump has repeatedly criticised India’s high tariffs. At the direction of President Donald Trump, US Trade Representative (USTR) Robert Lighthizer announced that US intends to terminate India and Turkey’s designations as Beneficiary Developing Countries under Generalized System of Preferences (GSP) programme.

In a letter to congressional leaders, Trump is reported to have said early this week, “I am providing notice of my intent to terminate the designation of India as a beneficiary developing country under the GSP program.” He said he was taking the decision because, after talks with India, he felt “India has not assured the United States that it will provide equitable and reasonable access to the markets of India.”

“India has implemented a wide array of trade barriers that create serious negative effects on United States commerce. Despite intensive engagement, India has failed to take the necessary steps to meet the GSP criterion,” the US Trade Representative (USTR) said.

India’s Commerce Secretary Anup Wadhawan said of the about 3,500 products it covers, India made use of the concession for just 1,784. Washington had decided to impose the duties despite the fact that India was working on an extensive and reasonable trade package, he added.

The GSP criteria include, among others, respecting arbitral awards in favour of US citizens or corporations, combatting child labour, respecting internationally recognised worker rights, providing adequate and effective intellectual property protection and providing the US with equitable and reasonable market access.

Countries can also be graduated from the GSP programme, depending on factors related to economic development.

The Trump Administration had launched an eligibility review of India’s compliance with the GSP market access criterion in April 2018.

India is the largest beneficiary of the GSP programme and ending its participation would be the strongest punitive action against India since 2017, when Trump took office.

“I will continue to assess whether the Government of India is providing equitable and reasonable access to its markets, in accordance with the GSP eligibility criteria,” Trump is reported to have said.

Meanwhile, reacting to the US decision, India’s commerce secretary Anup Wadhawan said, “Our assessment is that this will not have any significant impact on our 5.6 billion dollar exports to the US.”

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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