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

India-US talks on February 14: Crude oil imports to dominate agenda

Economy & Policy:

A pledge by India to reduce trade imbalance through greater crude imports, US firms’ concerns on the new e-commerce policy and retaliatory tariffs imposed by both nations will dominate the agenda on February 14, when officials sit down for the India-US Commercial dialogue.
Being held after a hiatus of a year, the annual talks will see Commerce and Industry Minister Suresh Prabhu discuss trade policy differences with US Commerce Secretary Wilbur Ross.

India expects Washington DC to push hard against the tough rules on foreign direct investments in e-commerce that have rattled US giants like Walmart.

Officials suggested the US was demanding a clear indication from India on reducing the trade deficit. The US is also in the process of terminating the Generalised System Preferences (GSP), which has allowed duty-free access for 3,500 Indian products to US markets. Officials added India might not put up a fight in this regard.

Last year, both countries had given a wide berth to contentious trade issues in the 2+2 dialogue, instead focus on defence and foreign affairs. The predecessor to the talks, the erstwhile ‘India-US Strategic and Commercial Dialogue’, had started in 2015. However, after two annual rounds, a decision was taken to carve out trade issues into a separate annual discussion — ‘India-US Commercial Dialogue’.


 In the first edition of trade talks, Prabhu had gone to Washington DC in October 2017. But both the nations coming to repeated blows over trade issues throughout 2018 had stopped talks from materialising.