Trump moves to scrap trade privilege for India, Delhi plays down impact

Trump moves to scrap trade privilege for India, Delhi plays down impact

Trump moves to scrap trade privilege for India, Delhi plays down impact

India Tuesday said the USA 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.

According to the US Trade Representative, the proposal to withdraw duty or tariff benefits on exports valued at $5.6 billion on over 1,700 products from India, including the engineering, textiles, gems and jewellery sectors on the directive of US President Donald Trump is because of India's failure to provide the US with assurances that it will provide equitable and reasonable access to its markets in several sectors.

The package was covering all concerns related to bilateral trade with the U.S. on sectors including medical devices, dairy products and agricultural goods, he said adding that India could not negotiate issues concerning interests of public healthcare.

Removing India from the preferential tariff system will take effect 60 days following the notification.

Of India's $80 billion in annual exports to the United States, only $5.6 billion were covered by the preferences, he said, according to a report by the Press Trust of India news agency.

"GoI has to be conscious of our developmental and public welfare interests".

In 2017, the United States protested against India's decision to cap prices of medical devices, which upset American firms. A quarter of GSP imports being consumer goods also benefitted consumers with lower prices in the United States, it pointed out. "India's total GSP duty benefits were $190 million", he said.

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"I do think the [Narendra] Modi government does very much understand that the Trump administration is not likely to back down from a trade fight", said Rossow. "So that again is a non-negotiable for us", he said adding that India could have simplified procedures for importing these two products "without compromising the basic requirements". "GSP is more symbolic of the strategic relationship, not in value terms". "Our relations remain strong with U.S. and discussions will go on", he further said. While it is not clear whether India will take retaliatory action, the world's fifth-largest economy has indicated that retaliatory tariffs will be kept out of current discussions.

In a statement published Monday, it said that India failed to assure the United States "that it will provide equitable and reasonable access to its markets in numerous sectors". India's economy, the sixth largest in the world, with a GDP of $2.6 trillion, according to the International Monetary Fund, is slated to outstrip its rivals in Europe in the coming decades.

India said it would accept the decision without further negotiations.

But the USTR said Turkey was graduating from the GSP programme due to its "increase in gross national income per capita, declining poverty rates, and export diversification". The basic tenets of GSP dictate that it is provided on a non-reciprocal basis, but the Donald Trump administration has linked it with market access and tariff reduction, issues that are perpetually under discussion. That aggression is on display in trade talks with countries ranging from China and Japan, to the United Kingdom and EU.

It said Turkey, after being designated a GSP beneficiary in 1975, has meanwhile demonstrated a "higher level of economic development", meaning that it can be "graduated" from the program.

As far as retaliatory tariffs on the U.S. were concerned, Wadhawan said i was a separate issue and the two countries had "deep-rooted relations".

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