Withdrawal of GSP Benefits from India (Download PDF)

()

Download PDF of This Page (Size: 369.66 K)

India’s designation as a beneficiary developing nation under the GSP (Generalised System of Preferences) was terminated by the United States w. e. f 5June 2019. As per US, India did not provide equitable and reasonable access to its markets for the US.

GSP is a preferential tariff system extended by developed countries to developing countries. This system allows concessional low/zero tariff imports from developing countries. The developed countries including the US, EU, UK, Japan etc. gives GSPs to imports from developing countries.

This is image show in US GSp Removal

This is Image Show in US GSp Removal

This is image show in US GSp Removal

Background & Overview

  • The Generalized System of Preferences are unilateral, non-reciprocal and non-discriminatory benefits extended by some developed nations to developing countries.

  • GSP was instituted on 1 January 1976, by Trade Act of 1974. The GSP program has effective dates which are specified in relevant legislation. In order to remain in effect it requires periodical reauthorisation.

  • As per US norms, to qualify for GSP a beneficiary nation must meet 15 discretionary and mandatory eligibility criteria established by US Congress which includes providing US with reasonable and equitable market access, respecting mutual and internationally recognised worker rights, working for combating child labour and providing adequate and effective intellectual property rights (IPR) protection.

  • The U. S. designed trade program seeks to promote economic growth in developing countries by providing preferential duty-free entry for up to 4,800 products from 129 designated beneficiary countries and territories.

Reasons for Withdrawal & Impact

  • India didn’t provide access to its markets for US dairy, medical device industry and issues related to data localisation norms according to Trump administration.

  • India is the largest beneficiary nation and exported goods worth $6.35 billion under the scheme in 2018 under this old preferential trade scheme of GSP.

  • As per the traders, exports are likely to become costlier, but the overall impact would be minimal on India’s outbound trade with US.

  • Some specific exports from India in sectors like leather, jewellery, agricultural products chemicals and pharmaceuticals are likely to undergo higher costs and competition.

  • The US import price of most of chemical products that constituted a large chunk of India’s exports is expected to increase by about 5 percent.

  • There will be job cuts by many companies.

Future Prospects

  • The trade between India and US is expected to reach USD 500 billion by 2023 - 24 which is about USD 142 billion at present.

  • There are issues which get resolved mutually from time to time in bilateral relationship such as in area of economic ties.

  • India offered a trade package to the US of about Rs35,000 crore annually in oil and gas imports and another Rs. 1,00,000 in defence orders in the coming years thought US did not respond to it.

  • India views this issue as a part of this regular process and will continue to build on strong ties with US, both economically and people-to-people. India is confident that two countries will continue to work together intensively for further growing these ties in a mutually beneficial manner.

Way Forward

  • India had offered resolution on significant US requests in an effort to find a mutually acceptable way forward.

  • US and other nations India shall uphold its national interest in these matters and should consider significant development imperatives and concerns and its people who aspire for better standards of living.

  • In any bilateral relationship particularly in area of economic ties, there are issues which get resolved mutually from time to time.

  • India views this issue as a part of this regular process and will continue to build on strong ties with US, both economically and people-to-people.

  • India is confident that two countries will continue to work together intensively for further growing these ties in a mutually beneficial manner.

- Published/Last Modified on: August 1, 2019

International Relations/Organizations

Doorsteptutor material for CLAT GK-Current-Affairs is prepared by worlds top subject experts- fully solved questions with step-by-step exaplanation- practice your way to success.

Developed by: