President Donald Trump announced on Monday to end preferential trade terms for India. Trump sent letters to the Congress showing his intention to terminate the trade benefits which allow duty-free entry of $5.6 billion worth of India’s exports to the United States.
Top Indian trade official Anup Wadhawan said the withdrawal of the Generalized System of Preferences (GSP) for Indian products would have a limited impact. “I am taking this step because, after the intensive engagement between the United States and the Government of India, I have determined that India has not assured the United States that it will provide equitable and reasonable access to the markets in India” Trump mentioned in a letter to the congressional leaders.
India is the world’s largest beneficiary of the GSP program and terminating its participation would have a huge negative impact on its economy.
The action would be effective after 60-days through presidential proclamation, said a US Trade Representative. A government source from New Delhi said that they hope that the termination of India from GSP program would not lead to major trade hurdles.
“I will continue to assess whether the Government of India is providing equitable and reasonable access to its markets in accordance with the GSP eligibility criteria,” read Trump’s letter, a copy of which was released to the press.
Senior economist, Dr. Akram Ul-Haq while speaking to The Daily Times said that this move by the US is likely not to benefit Pakistan’s economy. Pakistan’s main export to the USA is textile products and we will not be able to fill the gap left by India. This is primarily due to the fact that India exports high quality small machinery and tool parts to US in accordance with US standards however Pakistan does manufacture such high-quality machinery and therefore will not be in a position to take advantage of the situation.
He further added, “This move is primary intended to put some pressure on India in wake of the elections and address the trade balance between the two. India’s current exports to the US are extremely low compared to the values of its imports. Trump might not follow through with this and the situation is likely to deescalate based on what has happened in the past with US-China trade wars”.
These changes will not take effect for at least 60-days, a process Trump began Monday with letters to the speaker of the House of Representatives and the President of the Senate.
