Donald Trump Delivers Setback to Narendra Modi Government: India To Be Removed From US GSP Program List, To No Longer Be Eligible to Enjoy Tariff Concession
Donald Trump and Narendra Modi (Photo Credits: PTI)

Washington, March 5: In what is believed to be a major setback for India, United States President Donald Trump on Monday decided to withdraw India’s name from the Generalised System of Preferences (GSP) program list. The US President announced his decision saying that India will be taken off from the list of countries enjoying the GSP program on goods exported to the US. According to reports, Trump said the decision was taken as India no longer comply with the statutory eligibility criteria. US Trying to Find Common Ground Between India and Pakistan: State Mike Pompeo.

In a letter to the Speaker of the House of Representatives and the President of the Senate, the US President wrote, “In accordance with Section 502(f)(2) of the Trade Act of 1974, as amended (Trade Act) (19 U.S.C 2462(f)(2)), I am providing notice of my intent to terminate the designation of India as a beneficiary developing country under the Generalised System of Preferences (GSP) program.” Donald Trump Claims 'Presidential Harassment' By Democrats. 

Trump added saying, “I am taking this step because, after intensive engagement between the United States and the Government of India, I have determined that India has not assured the United States that it will provide equitable and reasonable access to the markets of India as set forth in Section 502(c)(4) of the Trade Act (19 U.S.C. 2462(c)(4))". The letter further read, “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". Why Is there Talk of U.S. President Donald Trump’s Impeachment? 

GSP Policy:

Under the GSP or zero-tariff policy measures, India enjoys tariff concession costing to USD 5.6 billion of exports to the US. From the time GSP has been in force since 1970s, India has been the world's largest beneficiary of the GSP scheme. Reports inform that the move to withdraw the GSP program marks a draconian action taken by Trump-led US government to reduce the US deficit with large economies. The US Trade Representative's Office (USTR) said that the preferences will end in 60 days after the notification to Congress and the Indian government.

India's Reaction:

Commerce Secretary Anup Wadhawan on US decision to withdraw India’s name from GSP program list said that the government of India has to be conscious of the developmental and public welfare interests. He said the decision will not have any significant impact on our 5.6 billion dollar exports to the US. "Our effort was to balance the affordable prices of the medical devices without compromising on public welfare", he said.

Wadhawan said India has very deep routed ties with USA and all the issues in the trade domain are on the table for discussions. He added saying that India will not compromise on affordability of medical devices. He further added that the economic value of GSP benefits are very moderate. "USA to terminate GSP in 60 days. Our relations remain strong with USA and discussions will go on", Wadhawan said.

Meanwhile, a press statement released by the US Trade Representative's Office stated , “The United States launched an eligibility review of India’s compliance with the GSP market access criterion in April 2018.  India has implemented a wide array of trade barriers that create serious negative effects on United States commerce.