File photo of United States President Donald Trump
File photo of United States President Donald Trump

Trump announces intent to end preferential trade treatment for India

NetIndian News Network

Washington, March 5, 2019

United States President Donald Trump on Monday announced his intent to terminate the designation of India as a beneficiary developing country under the Generalised System of Preference (GSP) program.
"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 as set forth in section 502(c) (4) of the Trade Act (19 U.S.C. 2462(c)4)," Trump said in a letter to the Speaker of the House of Representatives and the President of the Senate.
"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," he said.
The decision was announced in a statement by the Office of the United States Trade Representative (USTR).
"At the direction of President Donald J. Trump, U.S. 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 Generalized System of Preferences (GSP) program because they no longer comply with the statutory eligibility criteria," it said.
"India’s termination from GSP follows its failure to provide the United States with assurances that it will provide equitable and reasonable access to its markets in numerous sectors.  Turkey’s termination from GSP follows a finding that it is sufficiently economically developed and should no longer benefit from preferential market access to the United States market.
"By statute, these changes may not take effect until at least 60 days after the notifications to Congress and the governments of India and Turkey, and will be enacted by a Presidential Proclamation," it said.
Under the United States GSP program, certain products can enter the United States duty-free if beneficiary developing countries meet the eligibility criteria established by Congress.  GSP criteria include, among others, respecting arbitral awards in favor of United States citizens or corporations, combating child labor, respecting internationally recognized worker rights, providing adequate and effective intellectual property protection, and providing the United States with equitable and reasonable market access.  
Countries can also be graduated from the GSP program depending on factors related to economic development.
"The United States launched an eligibility review of India’s compliance with the GSP market access criterion in April 2018.  India has implemented a wide array of trade barriers that create serious negative effects on United States commerce.  Despite intensive engagement, India has failed to take the necessary steps to meet the GSP criterion," the statement said.
"The United States designated Turkey as a GSP beneficiary developing country in 1975.  An increase in Gross National Income (GNI) per capita, declining poverty rates, and export diversification, by trading partner and by sector, are evidence of Turkey’s higher level of economic development," it added.
Reacting to the announcement, the US-India Business Council said that, in keeping with its longstanding support for the GSP program, it had urged the continuation of GSP benefits for India. 
"Despite a number of serious bilateral trade issues, both India and the U.S. have gained from trade under the GSP program.   
"USIBC is in the process of collecting more information from both Governments on next steps, including any possible reactions by India. We will keep our members updated of this fast-moving development including convening a member call in the coming days," a statement from the council said.

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