Donald Trump Plans to End India's Preferential Trade Treatment


Hours after US President Donald Trump announced his decision to end preferential trade treatment for India, the government today said that the move will not have a "significant impact".

Trump, who is on a mission to expand marker access overseas 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.

By US statute, the changes to the GSP status can not take effect until at least 60 days after the notifications to the US Congress and the government of India, and will be enacted by a Presidential Proclamation. "Despite intensive engagement, India has failed to take the necessary steps to meet the GSP criterion", the trade representative's office added.

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

American President Donald Trump on Monday notified the US Congress that he intends to terminate preferential trade terms to India within 60 days, apparently dissatisfied with concessions New Delhi made in response to his efforts to force open the Indian market.

In a letter to Speaker of the US House of Representatives Nancy Pelosi, Trump said he was determined that New Delhi had "not assured" the US that it would "provide equitable and reasonable access" to the markets of India.

"India has implemented a wide array of trade barriers that create serious negative effects on United States commerce".

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The total India-US trade was $126.2 billion in 2017, with a $27.3 billion deficit for the US, according to the USTR.

Talking about the scale of trade and a future course of action Wadhawan said, "Overall trade involved is around $5.6 billion and duty benefits are around $190 million". Countries not covered by the GSP face USA tariffs of 2 percent and upwards.

"I will continue to assess whether the Government of India is providing equitable and reasonable access to its markets, in accordance with the Generalised System of Preferences (GSP) eligibility criteria", Trump said in his letter, a copy of which was released to the press, PTI said.

The GSP programme allows duty-free entry of 1,784 products from India into the United States, benefitting exporters of textiles, engineering, gems and jewellery and chemical products. The two countries have had differences over the restrictions placed on e-commerce by Amazon and on Walmart subsidiary Flipkart and on data housing by Visa and Mastercard.

The latest move comes as USA is negotiating with China over Trump's trade concerns, including massive trade deficit.

India is the world's largest beneficiary of the GSP programme and ending its participation would be the strongest punitive action against India since Trump took office in 2017, PTI said.

The US move comes ahead of the Indian general election, where Prime Minister Narendra Modi seeks reelection. The products include motor vehicle parts, jewelry, handicrafts, carpets, marine produce and a range of raw materials such as granite (Aside: the Vietnam Memorial is built from granite imported from India). The Trump Administration had launched an eligibility review of India's compliance with the GSP market access criterion in April 2018.