Trump announces plans to end $5.6 bn preferential trade programme for India

New York, March 5  US President Donald Trump has announced that he was ending India’s $5.6 billion trade concessions under the Generalised System of Preferences (GSP) programme accusing New Delhi of not providing Washington “equitable and reasonable access” to its markets.

Trump, who is on a mission to expand marker access abroad and end trade deficits, made the announcement on Monday in a letter to House Speaker Nancy Pelosi and Vice President Mike Pence in his capacity as the Senate President.

The US Trade Representative’s Office (USTR) said that the preferences will end in 60 days after the notification to Congress and the Indian government.

Meanwhile, Trump said that he will continue to monitor if India is “providing equitable and reasonable access to its markets” and meet the GSP eligibility criteria.

India had opposed proposals to end the GSP saying that it would be “discriminatory, arbitrary” and hurt the country’s development.

India is the largest beneficiary of the GSP exporting goods worth $5.6 billion to the US under the programme. Congress establishes the conditions of eligibility for GSP, which include “providing the US with equitable and reasonable market access, protecting workers’ rights and combating child labour”.

Trump wrote in his letter: “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.”

The USTR said: “India has implemented a wide array of trade barriers that create serious negative effects on United States commerce”, but did not mention the specifics in its statement.

“Despite intensive engagement, India has failed to take the necessary steps to meet the GSP criterion”, it added.

The total India-US trade was $126.2 billion in 2017, with a $27.3 billion deficit for the US, according to the USTR. India’s total exports were worth $76.7 billion and the end to GSP affects only a small part of it limited to $5.6 billion.

At a hearing held by the USTR last June on withdrawing India’s GSP, the minister in charge of commerce at the Indian Embassy in Washington, Puneet Roy Kundal, said that withdrawing the GSP benefits “would be discriminatory, arbitrary, and detrimental to the development, finance and trade needs of India, which is a vast and diverse developing country with unique challenges”.

The primary aim of the GSP is to help developing countries, particularly in sectors where the benefits can reach the poor.

Trump also said that he was ending the GSP for Turkey because of its economic success and rising living standards that would no longer make it eligible for the programme that is meant to help developing countries.

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