• United States President Donald Trump has said he intends to end the preferential trade terms for India under the U.S.’s Generalized System of Preferences (GSP) program.
  • The program, which sets zero tariffs for certain goods from a set of 120 developing countries in order to foster trade and economic development, accounts for some $5.6 billion of India’s exports to the U.S, making India the largest GSP beneficiary.
  • India has implemented a wide array of trade barriers that create serious negative effects on United States commerce.
  • Despite intensive engagement, India has failed to take the necessary steps to meet the GSP criterion.
  • India’s new e-commerce rules, price controls on medical devices and tariffs on ICT (information and communications technolog) products are among the issues that have caused trade frictions between the two countries.
  • One of the discretionary criteria the President must (as per the GSP statute) take into account while determining the GSP eligibility is the “extent to which such country has assured the United States that it will provide equitable and reasonable access to its markets and basic commodity resources and the extent to which it has assured the United States it will refrain from engaging in unreasonable export practices.”
  • A mandatory 60 days must now pass after notice has been given to the beneficiary countries and to Congress, during which time there is, at least technically, the possibility of negotiation.
  • After the 60-day period, a beneficiary country can be taken off the GSP list by a presidential proclamation.