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India India's GSP status shouldn't be withdrawn during election: US...

India’s GSP status shouldn’t be withdrawn during election: US Senators to Trade Rep

Donald Trump recently announced his decision to withdraw India from the list of GSP countries, complaining about non-compliance with the statutory eligibility criteria

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Washington, DC: Two US senators have urged the Trump administration to delay the decision to end the benefits given to India under the General Preferential Arrangement (GSP) till the end of the general elections in India.

GSP is America’s most comprehensive and oldest plan for trade. Under this programme, thousands of products from the beneficiary country are duty-exempted to encourage its economic development.

The US Congress gave its approval to increase India’s GSP status by 2020 in March last year.

Letter about India’s GSP status

Republican Senator John Cornyn and Mark Warner of the Democratic Party wrote to American Trade Representative Robert Lighthouse, saying that the Indo-US relations are very important. In such a scenario, it would be hasty to make such a crucial decision at the election time.

The letter addressed to US Trade Representative Robert Lighthizer, the co-chair of the United States Senate’s India Caucus, reads: “As you know, India’s elections will conclude on May 23, 2019. We believe that the election season may serve as a hindrance for our Indian counterparts in negotiating and concluding a deal on difficult political issues.”

“If another round of negotiations during the election season does not resolve the outstanding issues, we would ask you to consider delaying the issuance of a Presidential proclamation to withdraw India’s Generalised System of Preferences (GSP) benefits by at least 30 days, beyond the 60 day calendar, in order to move the negotiations beyond India’s elections,” the jointly signed letter dated 12 April says.

The Senators wrote, “We believe that allowing for continued negotiations beyond the elections would underscore the importance of this bilateral relationship and provide a real opportunity to resolve these market access issues, potentially improving the overall US-India relationship for years to come.”

The Senators are concerned that the US decision would affect American consumers. “While we agree that there are a number of market access issues that can and should be addressed, we do remain concerned that the withdrawal of duty concessions will make Indian exports of eligible products to the United States costlier, as the importer of those products will have to pay a ‘Most Favored Nation’ (MFN) duty, which is higher than the rate under GSP. Some of these costs will likely be passed on to American consumers,” the letter stated.

Background

US President Donald Trump had recently announced his decision to withdraw India from the list of countries enjoying the GSP on goods exported to the US last month. Trump has been complaining about India’s non-compliance with the statutory eligibility criteria.

Under the GSP or zero-tariff policy measure, India enjoys tariff concession worth $ 5.6 billion of exports to the US.

India has been the world’s largest beneficiary of the GSP that began in the 1970s.

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