NEW DELHI: The US pulling the plug on duty concessions on $5.6 billion of Indian exports may not mean the end of benefits under the Generalized System of Preferences (GSP), officials said, citing instances when the benefits were reinstated.
“This is not the end of GSP (benefits), possibly because the US has restored the benefits in the past to other countries after withdrawing them,” said an official aware of the details.
“There have been instances where they have restored the GSP. They withdrew the benefits from Argentina but subsequently restored them.”
Argentina, Liberia and Myanmar are the few countries that has the benefits reinstated after they made “sufficient progress” to become eligible for them.
The US terminated preferential tariffs to Indian exports on Friday after determining that it has not committed to provide “equitable and reasonable access to its markets” for the US.
Continuation of GSP was a key element of India-US negotiations on a trade package, which fell through in March when Washington announced its decision to end the benefits.
India has termed the US decision unfortunate and vowed to protect national interest even as it continues to build on its strong ties and resolve “ongoing issues.” It once again extended a deadline to impose retaliatory tariffs on 29 goods originating in the US, this time to June 16.
However, India is yet to decide whether to seek restoration of the GSP duty concessions. “We have to see. We know their expectations and there are areas where our national interests need to be balanced, not compromised,” the official said.
Another official said the US’ concerns over price caps on medical devices need to be balanced with affordable healthcare for the Indian people.
Though the two sides have been interacting regularly through telephones and video conferencing, the possibility of a meeting would be decided after internal consultations.
“Restoration looks uncertain at the moment, but India should be careful as it would have to meet strict compliance norms to be able to get GSP benefits again,” said a New Delhi-based expert on trade issues.
As per US norms, a beneficiary country must meet 15 discretionary and mandatory eligibility criteria established by Congress to qualify for GSP. These include providing the US with equitable and reasonable market access, combating child labour, respecting internationally recognised worker rights and providing adequate and effective intellectual property rights protection.
However, reinstatement of GSP benefits is conditional.
Argentina’s GSP benefits were restored in January last year after the resolution of certain arbitral disputes with US companies, new commitments to improve market access for US agricultural products and improved protection and enforcement of intellectual property rights.
In the case of Myanmar, the US suspended GSP benefits in 1989 due to worker rights concerns.
After the Asian country requested reinstatement in 2013, the preferential trade status was brought back in 2016 following a review of its compliance with the eligibility criteria, including steps it was taking on internationally recognised worker rights…...Read More>>