Expressing concern over the plan to terminate India’s generalised system of preferences (GSP) status, 25 US trade associations have sent a letter to the US Trade Representative (USTR) urging it to extend talks to reach a mutually agreeable solution. They fear the step in the middle of the Indian elections will not achieve its intended goal of applying pressure for reform.
The associations include the American Apparel and Footwear Association (AAFA), the American Association of Exporters and Importers (AAEI), the American Association of Port Authorities (AAPA), the Association of Food Industries, the Coalition for GSP, the Coalition of New England Companies for Trade and the Council of Fashion Designers of America (CFDA).
On March 4, 2019 Trump had announced his intention to terminate India from the developing countries benefiting from the GSP, claiming it no longer complied with the statutory eligibility criteria. He has given India a 60-day withdrawal notice on the GSP benefits.
Since 2003 India has received preferential access to the US market under the special duty-free trade arrangement called GSP, and over the years has cited a variety of shifting reasons for its trade barriers, including unscientific restrictions on US livestock feeding practices.
But India’s Ministry of Commerce and Industry said that its certification requirement that the animal providing the dairy product should never have been fed animal-derived blood meal is non-negotiable, given cultural and religious sentiments in India. The simplified dairy certification procedure requested could be considered, without diluting this requirement, it said, while conveying its willingness to provide market access related to products like alfalfa hay, cherries and pork.
According to a US Trade Representative press note, an eligibility review of India’s compliance with the GSP market access criterion was launched in April 2018. It found that India has set up many trade barriers that hamper US commerce and that intensive engagement had not resulted in India taking the necessary steps to meet the GSP criterion.
India’s Ministry of Commerce & Industry has responded that since the review was initiated the two countries have been discussing solutions for various bilateral trade issues. India stands to lose $190 million per annum if the GSP concessions are removed.
The step is likely to exacerbate political differences over trade issues, trigger retaliatory actions by New Delhi and undermine the business climate for US companies trading with and engaged in business in India, the letter said. The letter requested that any final revocation or suspension be deferred for at least 60 days to allow the new Indian Government to appoint officials to engage in bilateral negotiations.