Trump Announces Decision to Revoke India's 'Developing Country' GSP Status

Saul Bowman
March 6, 2019

India Tuesday said the United States government's move to withdraw duty concessions on certain products under the Generalized System of Preferences (GSP) programme will not have a significant impact on exports to America as the benefits were only about $190 million annually.

At President Donald Trump's direction, the USA on Monday announced its intention to terminate preferential tariff systems for Turkey and India which are aimed at bolstering the trading prospects of developing nations.

Speaking about India, Trump called it "a very high tariff nation" and accused the state of high tariffs: "When we send a motorcycle to India, it's a 100 percent tariff".

In a series of tweets on Tuesday, Pekcan said the decision to remove Turkey from the Generalized System of Preferences (GSP) would also affect small- and medium-sized businesses in the USA, and added that Turkey would continue to work on increasing the volume of trade between the two countries. "Despite intensive engagement, India has failed to take the necessary steps to meet the GSP criterion", said a USTR statement.

On Monday, U.S. Trade Representative Robert Lighthizer announced that India and Turkey would lose their GSP status within 60 days. The US had announced a review of India's continued eligibility for the programme in April 2018, citing market access concerns, specifically for dairy products and medical devices.

The decision to end the GSP may not entirely be influenced by high tariffs imposed by India on U.S. imports. "The TPP was dismissed, just as trade links with India and Turkey now appear set to be discarded", he said.

The decision to remove India was directed by the U.S. president. The GSP lowers USA duties on exports from 121 developing countries.

He said it was primarily because the economy of Turkey had improved a lot in the last four-and-a-half decades.

Elaborating the demands of the USA on medical devices and dairy products, he said India is willing to find a reasonable solution but that has to balance with the country's non-negotiable public health concerns and requirements.

The government had, in the middle of past year, decided the list of items on which it would impose retaliatory tariffs but has since then postponed the deadline of implementation six times.

On other concerns being raised by the USA related to duty cut on IT products, Wadhwan said India's duties are very moderate on those items and they are not "import stopping". The measure can take effect sixty days after Congress and the Indian government have been notified of the US decision.

"The GSP benefits will go, the US will not relent on this", Mukherjee said. "In a few instances, specific USA requests were not found reasonable and doable at this time by the departments concerned, in light of public welfare concerns reflective of India's developing country status and its national interest", Wadhawan said.

New Delhi has also sought to strong arm card payment companies such as Mastercard and Visa into moving their data to India, while imposing tariffs on goods such as smartphones, to the displeasure of the United States.

That sentiment has fuelled a damaging trade war between Washington and Beijing.

"Evidently, all the flexibility we showed did not meet their requirements", the official added.

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