New Delhi (NVI): India and US are reportedly in talks for reinstatement of ‘beneficiary developing nation’ status to the former in the Washington’s oldest and largest trade preference programme in lieu America getting more access to Indian markets.
The programme called Generalised System of Preference (GSP) aims at promoting economic development by allowing duty-free entry of products from designated beneficiary countries.
The US in June this year had terminated India’s designation as a beneficiary developing nation under the GSP after determining that New Delhi has not assured the US that it will provide “equitable and reasonable access” to its markets.
According to a Congressional Research Service (CRS) report on India-US Trade Relations, “US and India are holding negotiations to address bilateral trade frictions. They reportedly are discussing a deal for the US reinstatement of GSP for India in exchange for certain market access commitments from India.”
Currently, the US and India trade on WTO terms as they do not have a bilateral Free Trade Agreement (FTA).
“In 2018, India was the largest beneficiary of GSP; over one-tenth ($6.3 billion) of U.S. goods imports from India entered duty-free under the program, such as chemicals, auto parts, and tableware. GSP removal reinstated U.S. tariffs, which range from 1% to 7% on the top 15 GSP bilateral imports,” the report said.
India repeatedly delayed applying planned retaliatory tariffs against the United States, hoping to reach a bilateral resolution on trade issues. Soon after India lost its GSP eligibility, India announced it would impose higher tariffs affecting about $1.4 billion of U.S. exports, such as nuts, apples, and chemicals. The United States and India are challenging each other’s tariff measures in the WTO, the US Congress report added.
Bilateral trade in goods and services is about 3% of U.S. world trade, and has grown in recent years… The trade relationship is more consequential for India; in 2018, the United States was its second largest export market (16% share) after the European Union (EU, 17.8%), and third largest import supplier (6.3%) after China (14.6%) and the EU (10.2%), the report said.