India downplays impact of U.S. GSP withdrawal

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Centre keen to continue talks as it still has 60 days before the rule takes effect

The Indian government on Tuesday downplayed the effect of the U.S. decision to withdraw trade concessions granted to India under the Generalised System of Preferences (GSP), with Commerce Secretary Anup Wadhawan saying that the impact would amount to only $190 million on the value of $5.6 billion in exports to the U.S. that fall under the GSP category.

Sources in the Ministry of External Affairs, however, said that the government would continue to talk to the U.S. during the 60-day period after which the GSP withdrawal would come into effect, in an effort to work out a deal.

The U.S. Trade Representative office on Tuesday morning (Indian Standard Time) said that it had decided to withdraw the GSP status for India and Turkey at the direction of U.S. President Donald Trump following India’s “failure to provide the United States with assurances that it will provide equitable and reasonable access to its markets in numerous sectors.”

“The withdrawal of GSP benefits to India will have a minimal and moderate impact,” Mr. Wadhawan said at a press conference.

“The total GSP benefits amount to about $190 million on exports of $5.6 billion [that fall under the GSP category].”

‘Unacceptable’ requests

“We had worked out a meaningful package that covered the U.S. concerns but they made additional requests which were not acceptable at this time,” he added. “The GSP system is envisaged as a non-reciprocal benefit to developing countries.”

“Ours is not a systemic problem,” the Ministry of External Affairs official said. “Our efforts were to find a reasonable package and a balance between the two sides. There were a number of areas [in which] we were willing to bring U.S. products into the Indian market. In some cases, there were genuine cultural concerns like dairy products, where too we were trying to see how we could work with them.”

“Evidently, all the flexibility we showed did not meet their requirements,” the official added. “We are still in discussion and will continue to talk to them. There is agreement on a very substantial package, but some issues where for domestic reasons on both sides flexibility was not possible. While they have initiated this, there are still 60 days left.” Mr. Wadhawan added that India was still in talks with the U.S. on the higher import duties that the country charges on steel and aluminium, and said that India was still reviewing whether it would impose retaliatory tariffs or not.

Deadline postponed

The government had, in the middle of last year, decided the list of items on which it would impose retaliatory tariffs but has since then postponed the deadline of implementation six times. The latest deadline is April 1, 2019.

“The U.S. needs to keep in mind that for the second consecutive year, their exports to India have climbed by 30% in the past year,” the MEA official said.

“Surely that counts for something, particularly in a depressed global scenario. By kicking in the GSP review, the trade package has been shelved, but if they would like to pick up the conversation on that, we are ready,” the official said.

By U.S. statute, the changes to the GSP status cannot take effect until at least 60 days after the notifications to the U.S. Congress and the Government of India, and will be enacted by a Presidential Proclamation.

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