Explained: Impact of Donald Trump's attack on preferential trade with India

Current Affairs

United States president Donald Trump on Tuesday announced a plan to end preferential trade treatment for India, withdrawing benefits under a nearly 50-year-old programme for up to $5.6 billion worth of New Delhi’s exports to America.

The move comes after over a year of back-and-forth between the two countries, and pressure exerted upon the Trump administration by the American dairy export and medical devices lobbies.

“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,” Trump said in a letter to Congress representatives on Tuesday early morning.

According to World Bank data, India is currently the largest beneficiary of the ‘generalised system of preferences’ (GSP) programme, a trade initiative that was first started back in the 1970s.

India’s commerce ministry, however, has downplayed the impact of the move, saying that withdrawal of GSP benefits will have a “minimal and moderate impact”.

“The total GSP benefits amount to about $190 million on overall exports of $5.6 billion between the two countries,” commerce secretary Anup Wadhawan said at a press conference on Tuesday morning.

 “We had worked out a meaningful package that covered the US’ concerns but they made additional requests which were not acceptable at this time,” he added. “The GSP system is envisaged as a non-reciprocal benefit to developing countries.”..Read More

Exports likely to be hit as US moves to end major trade benefits to India

Economy News

Ending months of speculation, the Donald Trump administration has decided to cut benefits to Indian exporters under its Generalized System of Preferences (GSP) scheme.

"At the direction of President Donald J Trump, US Trade Representative Robert Lighthizer announced today that the United States intends to terminate India's and Turkey's designations as beneficiary developing countries under the GSP program because they no longer comply with the statutory eligibility criteria", the United States Trade Representatives office announced late on Monday.

India, having exported goods worth $5.6 billion to the US in 2017-18 under GSP, is the largest beneficiary of the scheme. The GSP is the largest and oldest US trade preference programme designed to promote economic development by allowing duty-free entry for thousands of products, mostly from developing nations.

While Turkey was also been removed from the GSP list on Monday, the USTR came down particularly hard on India. "India has implemented a wide array of trade barriers that create serious negative effects on United States commerce," it said.A long time coming

 Back in November last year, the US President had signed an executive order to end the duty-free status of 50 Indian exports to the US. These included inorganic and organic chemicals, agricultural products like cucumbers and gherkin, and certain types of animal hide. These were part of a global list of 90 items — from a large group of nations including Brazil, Argentina, Thailand, Egypt and Ecuador — for which prevailing rates of import tariff were to be be levied when imported into the US.

Trump move to end preferential trade treatment won't hurt India much: Govt

Economy News

India does not plan to impose retaliatory tariffs on US goods after US President Donald Trump said he intends to end India's preferential trade treatment, a top trade official said on Tuesday.
Anup Wadhawan said the withdrawal of the Generalised System of Preferences for Indian products would have limited impact.

The two countries had been working on a trade package to address each other's concerns, he said.Under the GSP program, India exports $5.6 billion worth of goods to the United States duty-free.
Arguing that New Delhi had failed to assure America that it would provide equitable and reasonable access to its markets in numerous sectors, US President Donald Trump on Monday informed the US Congress about his intent to terminate the designation of India and Turkey as a beneficiary developing country under the Generalised System of Preferences (GSP) programme.

In a letter to the Speaker of the US House of Representatives, Nancy Pelosi, Trump said he was determined that New Delhi had "not assured" the United States that it would "provide equitable and reasonable access" to the markets of India.

"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," Trump said in his letter, a copy of which was released to the press.


 In a separate letter, Trump also informed the Congress of his intent to terminate the GSP beneficiary designation of Turkey. This was primarily because the economy of Turkey had improved a lot in the last four-and-a-half decades, he said...Read More