Trump threatens to withdraw GSP concessions, India says economic benefit 'very moderate'

Donald Trump Says He Plans To End India's Preferential Trade Treatment

Trump plans to end India's preferential trade treatment

India had sent formal proposals to the Trump administration agreeing to open up its agriculture, milk, and poultry markets in response to Washington's warning that it will terminate the Generalized System of Preferences (GSP) - a program under which $5.6 billion of Indian exports to United States enjoy zero tariffs - because of lack of reciprocal market access.

India's commerce ministry said Tuesday that it won't try to hold onto its preferential zero-tariffs status with the United States after Washington chose to drop it from its Generalized System of Preferences program.

Notably, India exports worth $5.6 billion that enter the United States duty-free.

Shortly following Trump's election to the US presidency, India was among the countries identified by the USTR as a cause for concern given the administration's focus on USA trading partners who ran a deficit with the United States.

India has failed to provide assurance that it would allow required market access, while Turkeyis "sufficiently economically developed" that it no longer qualifies, the statement said.

Under the GSP programme, "certain products" can enter the United States duty-free if countries meet eligibility criteria including "providing the U.S. with equitable and reasonable market access". India, according to a report by CNN, was the biggest beneficiary of the programme in 2017, with exemptions on goods worth $5.6 billion. In terms of why India was dropped from the GSP list, the statement added, "The US launched an eligibility review of India's compliance with the GSP market access criterion in April 2018. So it became a fairly broad-based review covering a large number of trade issues." the ministry said.

Turkey is one of 120 countries that participate in the GSP, the oldest and largest United States trade preference program.

India said it would accept the decision without further negotiations. India, in turn, has brushed aside the United States move, saying that it would have a minimal to moderate impact on India's exports.

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The GSP benefits are relatively "very very moderate, so I do not think the economic value of GSP benefits is an important issue", Wadhawan added.

Last week, India delayed higher tariffs on some United States imports until April 1, in response to the Trump administration's refusal to exempt it from new steel and aluminium tariffs.

Elaborating the demands of the U.S. 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. "All undue concessions should be done away with and (the pending) retaliatory tariffs should be announced soon", he added.

Reacting to US' decision to terminate the preferential trade status given to it, India on Tuesday said it was working on finding a solution.

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

Trump's targetting of what he considers imbalanced trade relationships has sparked a trade war with Beijing that has dragged on for almost a year.

Another opposition came from the medical sector based on price controls on medical devices imposed by India.

"Modi has claimed that his personal diplomacy with leaders like Trump has led to benefits for India", Mihir Sharma said.

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