GSP: win-win for Indo-U.S. trade

GSP WIN-WIN FOR INDO-U.S. TRADE

The Generalised System of Preferences (GSP) is one of the oldest trade preference programmes in the world, and was designed to provide zero duties or preferential access for developing countries to advanced markets.

The U.S. GSP programme was established by the U.S. Trade Act of 1974, and promotes economic development by eliminating duties on thousands of products when imported from one of the 129 designated beneficiary countries and territories.

What has been changed?

• In April 2018, the Office of the United States Trade Representative (USTR) announced that it would review the GSP eligibility of India, Indonesia, and Kazakhstan.
• The proposed review for India was initiated in response to market access petitions filed by the U.S. dairy and medical device industries due to recent policy decisions in India, which were perceived as trade barriers.

Impact on India

• This tremendous benefit to the global economy is a small aspect of the U.S. trade balance; for example, of the total $2.4 trillion U.S. imports in 2017, only $21.2 billion arrived via GSP, amounting to less than 1% of total U.S. imports.
• Despite GSP’s low significance in the U.S. trade balance, its benefits ultimately help U.S. consumers and exporters by contributing to lower pricing of final products.
• In 2017, the top 10 GSP products exported by India to the U.S. were motor vehicle parts, ferro alloys, precious metal jewellery, monumental or building stone, rubber tyres, travel goods, certain sweetened or flavored waters, polyacetals/polyethers/polyesters, electric motors and generators, and insulated cables and wires.

Why GSP should been Continued

• Despite continued economic growth over the last two decades or so, India is a lower middle-income country. GSP allows Indian exporters a certain competitive edge and furthers the development of the country’s export base. It also allows India to integrate with global value chains (GVC) and hence, with global markets.
• These advantages provide opportunities for small enterprises and help in the overall livelihood creation endeavour in India.
• Further, it is important to note that Indian exports to the U.S. under the GSP programme are mostly intermediaries, and are not in direct competition with U.S.

Today, our two countries engage in countless areas of mutual cooperation, and a supportive stance in recognition of our greater goals and shared values would promise significant progress in the future.