What is GSP?
GSP, known as the Generalized System of Preferences, is a structured program offered to the countries belonging to weaker economies, by the US. It’s constructed in such a way that these countries have direct access to the US market. The framework of GSP lets countries to export goods to the US markets at lesser or no tariff. GSP benefits the countries greatly and also strengthens the trade network between the two countries.
Among the countries aided by GSP, India, and Brazil spring up to the top.
As per the Congressional Research Service, about $6.3 Billion worth merchandise exports to the US in the year 2018, was covered under GSP. This totals to 11% of all the merchandise from India. This also constitutes one-fourth of all the imports to the US under GSP.
Donald Trump terminates export from India
Donald Trump announced on March 4 that the US has made a calculated decision to terminate India as a beneficiary country under GSP. The 60-day notice ended on May 3, which will be effective 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. Accordingly, it is appropriate to terminate India’s designation as a beneficiary developing country effective June 5, 2019,” Mr. Trump’s proclamation read. This act will cost the American companies $300 million dollars in addition.
President of US-India business council (USIBC) Nisha Biswal reportedly said “It is unfortunate that the U.S. has moved to terminate GSP benefits. USIBC and the U.S. Chamber of Commerce have long advocated for continuation of the GSP program, which provides important benefits for both India and the United States.”
Biswal added “However, we recognize the significant concerns surrounding market access for U.S. companies in India, including price controls on medical devices and tariffs on ICT, and other trade issues,”.
General Sources: Washington Post, TrumpNews
Cover Image Source: NationalReview