26 US Congressmen ask Trump not to end GSP benefits for India

Over the past few years, the world stage has seen India continually growing its sphere of influence. Apart from the efforts of past Indian governments to aid this process, overseas persons of Indian origin and non-residential Indians have also played an instrumental role in shaping India’s position on the global arena as we see today. A group of 25 influential American lawmakers has urged the US Trade Representative not to terminate the GSP program with India after the expiry of the 60-day notice, saying the country’s companies seeking to expand their exports to India could be affected.

The Generalized System of Preference (GSP) is the largest and oldest US trade preference program 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 intends to terminate India’s designations as a beneficiary developing country under the GSP program. The 60-day notice period ends on May 3.

It shows that India still holds a significant diplomatic position in Washington. The country’s development has helped its allies realize it’s important. India is also one of the fastest growing economies and with people in Washington lobbying for India proves its diplomatic strength which is now visible in the US senate. On the eve of the end of the notice period, 25 US lawmakers made their last try to convince Trump Government to not terminate India from GSP.

One of the law makers said, “Terminating the GSP for India similarly would hurt, not help, companies seeking to expand their exports to India. Any progress made toward resolving issues over the last year of GSP negotiations seems unlikely to take effect if India is removed from the program,” The Congressmen have urged the government to not terminate GSP benefits until there is an opportunity to negotiate with India’s new government.

The US firms will face a huge loss, if India loses the GSP benefits. India was the United States’ 13th largest goods export market in 2018. U.S. goods exports to India in 2018 were $33.1 billion, up 28.9% ($7.4 billion) from 2017 and up 87.3% from 2008. U.S. exports to India account for 2.0% of overall U.S. exports in 2018. India is currently our 9th largest goods trading partner with $87.5 billion in total (two way) goods trade during 2018. Goods exports totaled $33.1 billion; goods imports totaled $54.4 billion. The U.S. goods trade deficit with India was $21.3 billion in 2018.

Apart from the trade issues that US will face, citizens working in these American firms would face salary loss, benefit loss and might lose their jobs as well. The Congressmen also brought out the point that India was going through the election process, and hence it is difficult for the government to immediately respond on the US notice. The 25 law makers asked the Trump government to provide some more time to the Indian Government for providing a proper response, once the new government comes in power.

It is understood that loss of trade benefits will also affect the ties between the two countries. US realize that India is an important ally, losing a good friend will not be beneficial for the Trump government as well. The unprecedented support of US lawmakers in favor of India shows the kind of diplomatic heft and lobbying power India wields now in Washington. The advent of Narendra Modi also energized the Indo-American community, which is evident from various political action communities which now exist in nearly every state in the United States. Direct interaction of Narendra Modi with Indian-Americans also played a huge role in mobilizing support for these groups. Sustained efforts by the Indo-American groups were successful in shifting the perspective of the erstwhile anti-India Congress to considering India a strong partner for global peace and prosperity.