Trump scraps GSP for India

The US has announced its plans to scrap the generalised system of preferences (GSP) benefits for India within two months that allows the Asian country to export up to $5.6 billion worth of products to America duty-free.

New Delhi, however, said the move will not have significant impact on its shipment to the US. “India exports goods worth $5.6 billion under the GSP and the duty benefit is only $190 million annually,” Indian Commerce Secretary Anup Wadhawan told reporters.

India is the world's largest beneficiary of the preferential trade treatment, which dates from the 1970s, according to Reuters.

Farm, marine and handicraft products are among India's exports most likely to be hit, Ajay Sahai, director general of the Federation of Indian Export Organisations, told Reuters.

The Indian commerce ministry said in a statement that Indian tariffs are within the bound rates under the World Trade Organisation's commitments and are on an average well below these bound rates.

It said India “was agreeable to a very meaningful mutually acceptable package” with the US.

The ministry's statement was in response to US President Donald Trump's announcement that he intends to end the preferential trade status granted to India and Turkey, and that New Delhi has failed to assure America of "equitable and reasonable" access to its markets.

Trump also notified the US Congress in letters of his "intent to terminate" trade benefits for both countries under the preferential trade treatment. 

The US had initiated the review of the GSP status to India on the basis of representations by the US medical devices and dairy industries but it subsequently included numerous other issues on a self-initiated basis.

These included issues related to market access for various agriculture and animal husbandry products, easing of procedures related to issues like telecom testing, conformity assessment and tariff reduction on ICT products.

During the bilateral discussions in the last one year, India “was able to offer a very meaningful way forward on almost all the US requests,” according to the statement.

However, “in a few instances, specific US requests were not found reasonable and doable at this time (by the Indian commerce) departments concerned, in the light of public welfare concerns reflective of India's developing country status and its national interest,” it said.

According to the commerce ministry, India was ready to address US concerns regarding medical devices in principle, by putting in place a suitable trade margin approach in a reasonable timeframe to balance concerns about fair pricing for the consumers and adequate remuneration for the suppliers.

On the issue of dairy market access, India has clarified that while its certification requirement that the source animal had never been fed animal derived blood meal is non-negotiable given the cultural and religious sentiment, the simplified dairy certification procedure sought by the US, without diluting this requirement, could be considered, the statement said.

It said India feels that any most favoured nation duty reduction would almost entirely benefit third countries and accordingly India conveyed to the US its willingness to extend duty concessions on specific items in which there is a clear US interest.

On telecom testing, India was willing to consider discussions for a mutual recognition agreement.

Referring to the India-US trade being heavily tilted towards India, the commerce ministry said that due to various initiatives resulting in enhanced purchase of US goods like oil and natural gas and coal, the trade deficit with India substantially reduced in 2017 and 2018.

“The reduction is estimated to be over $4 billion in 2018, with further reduction expected in future years on account of factors like the growing demand for energy and civilian aircraft in India.”

India's top GSP exports to the US in 2017 included motor vehicle parts, ferro alloys, precious metal jewelry, building stone, insulated cables and wires, said the Confederation of Indian Industry.