Trump to end trade privileges for India on June 5

Trump to end trade privileges for India on June 5

US President Donald Trump's decision on Friday to terminate benefits accruing to Indian exporters under the Generalized System of Preferences (GSP) scheme from 5 June must propel New Delhi to face the headwinds in the global trading system by pursuing robust trade policies to maximize its dollar-and-cent gains, according to analysts.

Separately, the United States is involved in an escalating trade war with China, and recently threatened tariffs on Mexican goods over illegal migration.

The Trump administration argues that New Delhi has failed to assure America that it will provide equitable and reasonable access to its markets in numerous sectors. "Accordingly, it is appropriate to terminate India's designation as a beneficiary developing country effective June 5, 2019", said Mr Trump on Friday, ignoring requests made by several top American lawmakers to reverse the decision as it may harm American businesses.

The presidential proclamation, however, did not reveal/ suggest the areas in which India had denied market access.

India has implemented a wide array of trade barriers that create serious negative effects on United States commerce.

The move was downplayed by India's commerce ministry, which said on Saturday that India will continue to seek to build strong economic ties with the United States and that it was "unfortunate" that attempts to resolve significant USA requests had not been accepted. "India, like the U.S. and other nations, shall always uphold its national interest in these matters". Adding, it has "significant development imperatives and concerns and our people also aspire for better standards of living".

In March, the Indian government had said that the USA government's move to withdraw duty concessions will not have a significant impact on the Indian exports to America.

India had offered a package to USA, both before and after White House announced its decision on discontining of GSP status.

Officials had previously raised the prospect of higher import duties on more than 20 USA goods if Trump dropped India from the programme, but there was no mention of that in the response.

The US gives preferential trade treatment to 129 developing countries under the Generalised System of Preference (GSP) - the largest and oldest US trade preference programme.

The two nations have been in a battle for months over trade agreements.

Of 4,800 products covered under the USA preferential trade system, Indian exporters have been using the concession only for 1,784 products.

But the United States dairy industry made a strong submission to the USTR to end the GSP for India citing its difficulties in exporting to India. It remains opposed to domestic generic industry-initiatives even though they offered medicines at affordable prices for a range of new diseases.

President Trump said: "I have determined to remove it from the list of developing country WTO members exempt from application of the safeguard measures on CSPV products and large residential washers". And Trump has criticised India in particular for charging high tariffs on USA motorcycles.

Against this backdrop, it is clear that the U.S. remains opposed to implementing robust trade policies by India or attempts to build an worldwide developing-country coalition by India.

Earlier on Wednesday, a USA official had said that the decision to evict India from a key trade pact is a "done deal".

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