In an extension of the trade war, Trump’s administration has terminated India’s designation as a beneficiary developing country under the key GSP trade program. The decision was reached after it failed to assure the U.S. that it will provide equitable and reasonable access to its market.
In a proclamation on Friday, Trump stated that “I have determined that India has not assured the US that it will provide equitable and reasonable access to its markets. Accordingly, it is appropriate to terminate India’s designation as a beneficiary developing country effective June 5, 2019.”
Earlier this year on March 4, Trump announced that the united states intend to terminate India’s designation as a beneficiary developing country under the GSP program. The 60 days notice ended on May 3.
The generalized system of preference GSP happens to be the largest and the oldest US trade preference program. The program was specifically designed to promote economic development by allowing duty-free entry for thousands of products from designated beneficiary countries. This enables nearly 2,000 products including auto components and textile materials to enter the US duty-free if the beneficiary developing countries meet the eligibility criteria established by Congress.
The criteria include respecting arbitral awards in favor of the US citizens or corporations, combating child labor, respecting internationally recognized worker rights, providing adequate and effective intellectual property protection, and providing the US with equitable and reasonable market access among others.
In 2017, India was the largest beneficiary of the program with $5.7 billion in imports to the US given duty-free status according to a Congressional Research Service report issued in January.
Meanwhile, according to a statement issued by Dan Anthony, executive director of the coalition of GSP, the decision of Trump would cost American business over USD 300 million in additional tariffs every year. He also noted that the decision was made by Mr. Trump despite the opposition from members of the Congress and hundreds of American businesses that have called for continued GSP eligibility for India.
Also, according to India, the move of the US government will not have a significant impact on exports to America as the benefits were only about USD 190 million annually. An Indian government official also noted that the US government reached the decision despite the fact that India was working on an extensive and reasonable trade package.