US to end preferential trade terms Under GSP for India

The US President Trump has terminated India’s designation as a beneficiary developing nation under the Generalized System of Preference (GSP) trade programme.

Why did the US Withdrew?

The US has stated that:

  • India did not assure the US that it will provide equitable and reasonable access to its markets.
  • India has implemented a wide array of trade barriers which create serious negative effects on the United States trade.
  • Despite intensive engagement, India has failed to take the necessary steps to meet the GSP criterion.

India was the largest beneficiary under the GSP programme in 2017 with $5.7 billion in imports to the US given duty-free status.

Generalised System of Preferences

Generalised System of Preferences was instituted by the US in 1976 under the Trade Act of 1974. It is a U.S. trade program designed to promote economic growth in the developing world by providing preferential duty-free entry for up to 4,800 products from 129 designated beneficiary countries and territories.

The GSP is the largest and oldest US trade preference programme which was designed to promote economic development by allowing duty-free access for thousands of products from designated developing countries.

The other criteria under the GSP includes respecting arbitral awards in favour of the US citizens or corporations, combating child labour, respecting internationally recognised worker rights, providing adequate and effective intellectual property protection, and providing the US with equitable and reasonable market access.

Countries are graduated from the GSP programme depending on factors related to economic development.

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