Withdrawal Of GSP Discriminatory
The United States has withdrawn the Generalised System of Preferences (GSP) for India with effect from 05 June 2019. GSP benefits are envisaged as non-reciprocal and non-discriminatory to be extended by developed countries to developing economies. The programme, which allows duty-free entry for certain products into the US market, has benefited both countries allowing from greater trade relations between the two. Under the scheme India was allowed to export close to 3000 products on duty free basis to the US. India exported goods worth just $6.2 billion in 2018 under the GSP. The GSP’s share in India’s total exports to the U.S. has come down significantly.
In April 2018, the US initiated a review of GSP benefits on account of representations by American dairy and medical industries. Prices of certain important medical devices like stents in Indian domestic markets were quite high; India put in place price caps. The US firms raised concerns on this move. Later, the US also added various other issues on unilateral basis which included market access for various agri-products, animal husbandry items, relaxation for various procedural requirements in IT goods. So, it became a fairly broad-based review covering a large number of trade issues.
President Trump in his proclamation stated that it is appropriate to terminate the designation of India as a beneficiary developing country under the GSP, effective June 5, 2019. He also stated that he would like to remove India from the list of developing country WTO Members exempt from application of the safeguard measures on Crystalline Silicon Photo-Voltiac cells (CSPV) products and large residential washers. Since the announcement, Indian officials have been working with their American counterparts to work on a trade package for agriculture and dairy sector and medical device sector but that has to balance India’s non-negotiable public health concerns and requirements.
President Trump stated that the US will withdraw the GSP, asserting that New Delhi has failed to assure America of "equitable and reasonable" access to its markets. He also stated that India was no longer a developing country and thus would be excluded from the list designed to help developing countries only.
In April 2018, the US initiated a review of GSP benefits on account of representations by American dairy and medical industries. Prices of certain important medical devices like stents in Indian domestic markets were quite high; India put in place price caps. The US firms raised concerns on this move. Later, the US also added various other issues on unilateral basis which included market access for various agri-products, animal husbandry items, relaxation for various procedural requirements in IT goods. So, it became a fairly broad-based review covering a large number of trade issues.
President Trump in his proclamation stated that it is appropriate to terminate the designation of India as a beneficiary developing country under the GSP, effective June 5, 2019. He also stated that he would like to remove India from the list of developing country WTO Members exempt from application of the safeguard measures on Crystalline Silicon Photo-Voltiac cells (CSPV) products and large residential washers. Since the announcement, Indian officials have been working with their American counterparts to work on a trade package for agriculture and dairy sector and medical device sector but that has to balance India’s non-negotiable public health concerns and requirements.
President Trump stated that the US will withdraw the GSP, asserting that New Delhi has failed to assure America of "equitable and reasonable" access to its markets. He also stated that India was no longer a developing country and thus would be excluded from the list designed to help developing countries only.
The US Commerce Secretary Wilbur Ross during his India visit last month had listed out alleged unfair trade practices by India, including on data localization, price control on medical devices and higher tariff on telecommunication equipment as areas of concern for the US.
The US decision has been described by many analysts as ‘protectionist’. The US administration of Mr. Trump has charted a new course in international trade which is quite different from the laid down norms. It could lead to unnecessary trade disputes, as is evident from the US-China tariff war. The US decision goes against the fundamental principle of non-discrimination because it discriminates between developing countries. It also undermines the objective recognised in the preamble to the World Trade Organization (WTO) agreement that there is a need for ‘positive efforts’ to ensure that developing countries secure a share in their growth in international trade commensurate with the needs of their economic development.
The US decision has been described by many analysts as ‘protectionist’. The US administration of Mr. Trump has charted a new course in international trade which is quite different from the laid down norms. It could lead to unnecessary trade disputes, as is evident from the US-China tariff war. The US decision goes against the fundamental principle of non-discrimination because it discriminates between developing countries. It also undermines the objective recognised in the preamble to the World Trade Organization (WTO) agreement that there is a need for ‘positive efforts’ to ensure that developing countries secure a share in their growth in international trade commensurate with the needs of their economic development.
The Confederation of Indian Industry has stated that the decision has been taken in “haste” and would hurt domestic exporters. It has expressed hope that both the US and India would discuss the matter and find an amicable solution to this issue.
India has termed the decision to withdraw the GSP status for India as ‘unfortunate’ and one that will impact trade in both nations. India, meanwhile is exploring means to support industries such as imitation jewellery, leather articles (other than footwear), chemicals & plastics, agriculture, pharmaceuticals and surgical instruments could be the worst affected by the US' decision.
Exporters should also be encouraged to look at other markets to de-risk their business. There could also be retaliatory tariffs on US products. However, India does not take immature decisions that could potentially damage bilateral ties. New Delhi has it would continue to work with the US to find a suitable balance to meet India’s needs and US industry’s requirements.
Script: Dr. Stuti Banerjee, Strategic Analyst on American Affairs
India has termed the decision to withdraw the GSP status for India as ‘unfortunate’ and one that will impact trade in both nations. India, meanwhile is exploring means to support industries such as imitation jewellery, leather articles (other than footwear), chemicals & plastics, agriculture, pharmaceuticals and surgical instruments could be the worst affected by the US' decision.
Exporters should also be encouraged to look at other markets to de-risk their business. There could also be retaliatory tariffs on US products. However, India does not take immature decisions that could potentially damage bilateral ties. New Delhi has it would continue to work with the US to find a suitable balance to meet India’s needs and US industry’s requirements.
Script: Dr. Stuti Banerjee, Strategic Analyst on American Affairs
Comments
Post a Comment