Withdrawal of India’s GSP benefits by USA

Press Release Draft

The United States of America (USA) has w.e.f. 5 June 2019 withdrawn India’s GSP benefits. These are unilateral, non-reciprocal and non-discriminatory benefits extended by some developed countries to developing countries. India as part of our bilateral trade discussions, had offered resolution on significant US requests in an effort to find a mutually acceptable way forward. It is unfortunate that this did not find acceptance by the US. India, like the US and other nations shall always uphold its national interest in these matters. We have significant development imperatives and concerns and our people also aspire for better standards of living. This will remain the guiding factor in the Government’s approach.
In any relationship, in particular in the area of economic ties, there are ongoing issues which get resolved mutually from time to time. We view this issue as a part of this regular process and will continue to build on our strong ties with the US, both economic and people-to-people. We are confident that the two Nations will continue to work together intensively for further growing these ties in a mutually beneficial manner.
Source: PIB, Government of India, Ministry of Commerce & Industry

Unquote by TNS

It is appears that, in spite of our efforts to find a mutually acceptable way, we have not yielded the desired outcome. There could be many reasons including the protectionist policies of the USA.
Having said this, decision of USA is going to impact the trade sentiment in general. On one hand we are trying to get more market access and opportunities arising out of undeclared trade war between USA & China and on the other side, there is further possibility of changing rules and criteria for H1B visas for Indians. Even if there is possibility of capturing some market share in China, it is not very easy as products have to be cost competitive.
The action of USA has some background. USA & other 39 countries are opposing various subsidies & incentives granted by India & panel has been constituted in WTO under the provisions of Anti-subsidy and Countervailing Measures. India is also facing a challenge by countries such as Australia, Guatemala, Costa Rica, Thailand, the EU and Brazil at the WTO forits sugar and sugarcane subsidies. Brazil has requested for a consultation and the rest of the countries have requested to join on the ground that their substantial interest lies in the consultation soon to begin at the WTO. Paraguay, Thailand, Pakistan, Canada and New Zealand are also amongst the countries which have raised their concerns. The subject of agricultural subsidies is very delicate and the negotiations have been far more protectionist in this area.
Under these circumstances it would be difficult to protect schemes like MEIS and our government is fully aware of it. The final solution to all these problems is moving away from “so called incentives” and concentrating on schemes like “Refund of Central and State Levis”, which are WTO compatible. Industry needs to take very serious view of these challenges and must concentrate on realistic measures.
Unquote by T N Seetharaman, CEO - Global Logistics Division - Transworld Group