by Pankaj Yadav
NEW DELHI, June 4 (Xinhua) -- The upcoming withdrawal of the Generalized System of Preferences (GSP) by the United States to India has prompted criticism and concerns from several quarters in India, especially the trading community and business organisations.
U.S. President Donald Trump announced last week that he will end the preferential trade treatment for India on June 5, which exempts billions of dollars of its products from U.S. tariffs due to its developing country status.
"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," Trump said in a White House statement, citing the Trade Act of 1974.
Subhomoy Bhattacharjee, a consultant at the Research and Information System for Developing Countries (RIS), said, "Any decision that seeks to curb the role of free trade is something not good, and in this case it has come as a series of steps of curtailing international trade."
"It's not a good news. It makes the entire volume of trade across the world much less optimal than what it could have been in the situation of free trade. That is something not looked forward to, especially when we want to push people up from poverty line."
RIS is a New Delhi-based autonomous policy research institute that specialises in issues related to international economic development, trade, investment and technology.
The Federation of Indian Chambers of Commerce and Industry (FICCI) called for a dialogue between India and the U.S. to find a workable solution with regard to the termination of the GSP.
"If not resolved amicably it may, however, impact the spirit of India-U.S. relationship which has a huge growth potential, " FICC president Dilip Chenoy said, adding, "India-U.S. economic relationship needs to be seen by both the countries from a larger canvas."
He further stated that the U.S. decision will have short-term impact on India-U.S. trade, but this should be seen in the overall context of U.S. actions to protect its trade interests globally.
President of the Federation of Indian Export Organisations (FIEO) Ganesh Kumar Gupta opined that the GSP withdrawal by the U.S. would have a "limited impact" on overall exports to the United States, but feared that some products may face the heat.
"India's exports to the U.S. during 2018 were 51.4 billion U.S. dollars, out of which 6.35 billion U.S. dollars value of exports were under the GSP scheme, and net benefit to the tune of only 260 million U.S. dollars were accrued by the Indian exporters. Thus, at macro level the impact of GSP withdrawal on our exports to U.S. would be minimal," said Gupta.
However, in respect of products having GSP benefits of 3 percent or more, exporters may find it difficult to absorb the GSP loss, he added.
According to him, most affected sectors would be imitation jewellery, leather articles, pharmaceuticals and surgical, chemical and plastics, and agriculture.
"India as part of our bilateral trade discussions, had offered resolution on significant U.S. requests in an effort to find a mutually acceptable way forward. It is unfortunate that this did not find acceptance by the U.S.," stated an official statement issued by the Commerce and Industry Ministry last weekend.
Upholding the "national interests" of its people's aspirations for better standards of living, the Indian government statement expressed the hope that the two nations will continue to work together intensively for further growing these ties in a mutually beneficial manner.
In early March, the U.S. Trade Representative's (USTR) office announced that the United States intends to move India and Turkey out of a program under which a group of developing countries receive preferential trade treatment.
The program, called the Generalized System of Preferences (GSP), was created to support developing countries alleviating poverty through trade. India was designated as a beneficiary developing country under the program in a presidential executive order in November 1975.
