GS 2: IR | Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests

Why in News?

U.S. President has announced that he intends to end preferential trade terms for India under the Generalized System of Preferences (GSP) programme.

GSP programme:

  • The GSP programme, which sets zero tariffs for certain goods from a set of 121 developing countries to foster their trade and economic development, accounts for some $5.6 billion of India’s exports to the U.S., making India the largest GSP beneficiary.
  • Chemicals, gems and jewellery, engineering and textiles are among the Indian industrial sectors that benefit from the GSP.

The discretionary criteria:

  • One of the discretionary criteria the President must (as per the GSP statute) take into account while determining GSP eligibility is whether the beneficiary “will provide equitable and reasonable access to its markets and basic commodity resources and the extent to which it has assured the United States it will refrain from engaging in unreasonable export practices.”

Challenges faced by U.S.A:

  • India’s new e-commerce rules — which have impacted American companies like Amazon and Walmart (majority owner of Flipkart).
  • Price controls on medical devices (cardiac stents).
  • Tariffs on ICT products like smart watches and high-end mobile phones
  • Lack of greater market access for the U.S. dairy industry.

India’s measures:

  • Indian Oil Corporation announced a $1.5 billion deal to purchase oil from the U.S. until March 2020.
  • Indian officials have been quick to bring up the declining trade surplus (over just over $21 billion) that India has with the U.S.
  • India and the U.S. have been in focused trade talks since Washington imposed tariffs on steel and aluminium early last year, ostensibly on grounds of national security.
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