Trump Ends $5.6B Trade Preference for India

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“I have determined that India has not assured the United States that India will provide equitable and reasonable access to its markets,” Trump said in a proclamation issued late on Friday.

WASHINGTON (Reuters, IANS) — As he hardens his stand on trade, US President Donald Trump is ending India’s $5.6 billion trade concessions under the Generalised Scheme of Preferences (GSP) programme with effect from June 5.

“I have determined that India has not assured the United States that India will provide equitable and reasonable access to its markets,” he said in a proclamation issued late on Friday.

“Accordingly,” he added, “it is appropriate to terminate India’s designation as a beneficiary developing country effective June 5, 2019.”

The end to GSP comes ahead of the meeting between Trump and Prime Minister Narendra Modi in Japan later this month during the G20 Summit. Trade issues are likely to come up during their meeting.

Trump is on a mission to end the massive US trade deficits and has imposed or proposed higher tariffs on imports from several countries while involved in a trade war with China. On Wednesday, he announced punitive tariff hikes on imports from Mexico over its leniency towards immigrants from Central America.

Turkey was also stripped of its GSP trade concessions along with India on Friday.

India, which came under the GSP programme in 1975, is its largest beneficiary in the US. However, India’s GSP exports of $5.6 billion were only a small part of the total exports worth $76.7 billion in 2017, according to the US Trade Representative.

Total India-US trade was $126.2 billion in 2017, with a $27.3 billion deficit for the US.

The GSP programme is limited to certain categories like apparel and footwear with the aim of alleviating poverty by promoting exports by poor craftspeople and artisans in those sectors.

At a hearing held by the USTR last June on withdrawing India’s GSP, the minister-in-charge of commerce at the Indian Embassy in Washington, Puneet R. Kundal, said that withdrawing GSP benefits to India “would be discriminatory, arbitrary, and detrimental to the development, finance and trade needs of India, which is a vast and diverse developing country with unique challenges”.

Trump had notified Congress in March of his intent to end the GSP preferences as required by law.

Trump has been on a warpath against what he said were high tariffs on US imports to India.

While pushing for the Reciprocal Trade Act in January, he brought up India’s duty on American whiskey, which he said was 150 per cent, and on Harley Davidson motorcycles that he asserted he had gotten reduced from 100 per cent to 50 per cent.

Delhi plays down move

Meanwhile, the Indian government said on Saturday it will continue to seek to build strong economic ties with the US despite a decision by President Donald Trump to end preferential trade treatment for India from June 5.

In a relatively tame response, the Indian government said it was “unfortunate” that its attempts to resolve significant US requests had not been accepted.

“India, like the US and other nations, shall always uphold its national interest in these matters,” the Indian government said in a statement issued through India’s trade ministry.

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