The Trump administration has said it is not going back on its decision to terminate India’s designation as a beneficiary developing nation under the key GSP trade programme, terming the suspension a “done deal”.
The Generalised System of Preference (GSP) is the largest and oldest US trade preference programme and is designed to promote economic development by allowing duty-free entry for thousands of products from designated beneficiary countries.
On March 4, President Donald Trump announced that the US intended to terminate India’s designation as a beneficiary developing country under the GSP programme.
The 60-day notice period ended on May 3. A formal notification is now expected anytime.
The Trump administration has prioritised working with the Government of India to ensure that US companies have a level playing field, a senior State Department official told reporters on Thursday, hours after Narendra Modi was sworn in as Prime Minister for a second time following his spectacular electoral victory in the general elections.
“The persistent market access issues, which we were engaged with our Indian counterparts over the last year, led us to announce in March that we would be suspending or withdrawing India’s benefits under the Generalised System of Preferences programme,” said the official who spoke on the condition of anonymity.
“That suspension is a done deal. Now the task is how do we look ahead; how do we work under the second Modi Administration, to identify a path forward?” the official said, reflecting the Trump administration’s decision that the GSP termination is final.
Under the GSP programme, nearly 2,000 products including auto components and textile materials can enter the US duty-free if the beneficiary developing countries meet the eligibility criteria established by Congress.
India was the largest beneficiary of the program in 2017 with $5.7 billion in imports to the US given duty-free status, according to a Congressional Research Service report issued in January.
“We believe there’s enormous potential to grow our trade relationship and to help stimulate the jobs that Prime Minister Modi is committed to bringing to an overwhelmingly young Indian population.
“We believe that if India is prepared to address policies including data localisation and ecommerce measures, that served to stifle international investment from top tier companies, that we can continue to make significant progress moving forward,” the official said.
