- The U.S. President Donald Trump issued a proclamation ending the trade benefits given to India under Generalized System of Preferences (GSP) effective June 5, 2019.
- The decision to terminate India’s designation as a beneficiary developing nation under the GSP programmes results from its failure to assure the US that it will provide “equitable and reasonable access to its markets.” As Trump said, “I have determined that India has not assured the US that it will provide equitable and reasonable access to its markets. Accordingly, it is appropriate to terminate India’s designation as a beneficiary developing country effective June 5, 2019.”
- India is the biggest beneficiary of the GSP, which allows preferential duty-free imports of up to $5.6 billion.
Possible causes
- The US had initiated the review of GSP on the basis of representations by the US medical devices and dairy industries, but subsequently included numerous other issues on a self-initiated basis. These included issues related to market access for various agriculture and animal husbandry products, relaxation / easing of procedures related to issues like telecom testing / conformity assessment and tariff reduction on ICT products. The Department of Commerce engaged with various Government of India departments concerned with these issues, and India was able to offer a very meaningful way forward on almost all the US requests. In a few instances, specific US requests were not found reasonable and doable at this time by the departments concerned, in light of public welfare concerns reflective of India’s developing country status and its national interest.
Generalized System of Preferences (GSP)
- The Generalized 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.
