In what comes as a shot in the arm for improving Indo-US relations, a bipartisan group of 44 influential lawmakers in the US have urged the Trump administration to restore India’s designation as a beneficiary developing nation under the Generalised System of Preferences (GSP) trade programme as part of a preferential trade deal between India and the US. It is relevant to mention here that US President Donald Trump had terminated India’s designation as a beneficiary developing nation under the GSP earlier this year.
The GSP is the largest and the oldest trade preference programme of the United States. It is designed to promote economic development by allowing duty-free imports for thousands of products from the deginated developing countries.
On March 4, US President Donald Trump had announced that the US intended to terminate India’s designations as a beneficiary developing country under the GSP program. The 60-day notice period ended on May 3. On the eve of the end of the notice period, 25 US lawmakers had made a last attempt to try and convince the Trump administration retaining ending India’s designation as a beneficiary developing nation under the GSP. However, President Trump had stuck to his decision of revoking India’s designation as a beneficiary developing nation. Trump had then said, “I have determined that India has not assured the US that it 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.”
Now, as many as 44 influential lawmakers in the United States raising their voice for reinstating India’s designation as a beneficiary developing nation is an indicator of the kind of diplomatic position India holds in the US. Now, the group of 44 US lawmakers have written a letter to the US Trade Representative, Robert Lighthizer suggesting an “early harvest” approach that “would ensure that long-sought market access gains for US industries are not held up by negotiations over remaining issues.” Dan Anthony, Executive Director of the Coalition for GSP, said, “Companies are telling Congress about the American costs – both in dollars and jobs- of lost GSP eligibility for India.” He also said, “The letter shows Congress’ strong, bipartisan support for swift action to reinstate GSP for India and to help constitutes that depend on two-way trade.” It is important to note here that while GSP is generally seen as a benefit to foreign countries, it is the American businesses and workers that have suffered the most till date. In its statement, Coalition for GSP has pointed out how the imports from India have gone up by 40 per cent in June/ July 2019 as compared to the last year. This massive surge in Indian exports has taken place despite the higher tariffs which have come into picture due to the termination of India’s designation of a beneficiary developing nation under the GSP. As per the Executive Director, Coalition for GSP, “Indian exporters are thriving while American companies are stuck paying $ 1 million a day in new tariffs.”
It must be noted that TFIPOST had stated earlier that the US firms would face a huge loss, if India lost 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. It had also analysed how the US citizens working in these firms would face salary loss, benefit loss and might lose their jobs as well.
Expectations are pretty high in the present circumstances as the Indo-US relations already seem to be peaking at the right time. The letter by 44 influential American lawmakers comes right ahead of PM Modi’s massive Houston rally September 22 which would be attended by a massive gathering of Indian-Americans. US President Trump will join “Howdy Modi” in the September 22 rally in Houston. This will be a rare show of joint appearance a US President and a foreign leader before an ethnic community. It is being seen as a massive show of bond shared by the two leaders. As such the Indo-US relations are showing highly positive sentiments and the fact that the US companies have also incurred costs both in terms of dollars and jobs ever since the termination of India’s designation as a beneficiary developing nation under the GSP strongly suggests that the US might embark on a process of course correction and restore Preferential Trade Status for India.
