U.S. to end preferential trade status for India

Trump plans to end India's preferential trade treatment

File photo of United States president Donald Trump and Prime Minister Narendra Modi.

India has said the US' withdrawal of duty benefits to its $5.6 billion of exports will not have a major impact on India's bilateral trade and denied United States president Donald Trump's accusation of the country having high tariffs.

The government confirmed on Tuesday that the United States has given a 60-day withdrawal notice to India on the Generalised System of Preferences (GSP) benefits, which amount to duty reduction of 190 million dollars a year.Since the review initiated by the United States in April 2018 on India's GSP benefits, both countries have been discussing various trade issues of bilateral interest for a suitable resolution on mutually acceptable terms.

Under the GSP program, "certain products" can enter the USA duty-free if countries meet eligibility criteria including "providing the United States with equitable and reasonable market access".

Muscat: India will no longer be allowed to export goods to the United States without paying the trade duties required, after US President Donald Trump made a decision to remove India from its list of favoured trade countries.

The US Trade Representative's Office said America's goods and services trade deficit with India stands at $23.7 billion. "In addition, Turkey has graduated from other developed countries' GSP programmes due to its increase in economic development or through reciprocal arrangements", he argued.

Monday's decision came as Washington and Beijing seek to negotiate an exit to the Trump administration's most high-profile and costly trade battle.

Farm, marine and handicraft products were among India's exports most likely to be hit by the move, Ajay Sahai, the director general of the Federation of Indian Export Organisations, told Reuters. Commerce Secretary Anup Wadhawan told the media Tuesday that the withdrawal will not have much impact on India's exports to the USA, which stand at around $40 billion.

US' trade preference programme, GSP, aims to promote economic development in beneficiary countries by removing duties on products.

Under the United States GSP programme, certain products can enter the U.S. duty-free if the beneficiary developing countries meet the eligibility criteria established by Congress.

The e-commerce rules followed a drive by New Delhi to force global card payments companies such as Mastercard and Visa to move their data to India and higher tariffs on electronic products and smartphones. "India is a very high-tariff nation".

During the recently concluded Trade Policy Forum talks, U.S. commerce secretary Wilbur Ross had also raised concerns regarding new trade barriers created by India, hinting at the stringent e-commerce rules that have affected USA companies, including Amazon.com Inc. and Flipkart owner Walmart Inc.

India's opposition, fighting a bitter election battle with Modi, could seize on the US setback to embarrass the prime minister, the official who declined to be named said.

He added that India's concerns were regarding the affordability of medical devices and fair pricing. "Oil and gas imports from the USA are increasing", he added.

Last year India retaliated against United States tariff hikes on steel and aluminium by raising import duties on a range of goods. "Despite intensive engagement, India has failed to take the necessary steps to meet the GSP criterion", the trade representative's office added.

"The GSP benefits will go, the USA will not relent on this", said Mukherjee.

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