US says India’s exit from duty-free import scheme is ‘done deal’
Hindustan Times
May 31, 2019
US says India’s exit
from duty-free import scheme is ‘done deal’
President Donald
Trump’s administration said in March it was removing India from the Generalized
System of Preferences, which gives favorable access to goods from developing
countries.
United States,India
trade preference,President Donald Trump
A US decision to
evict India from a key trade pact is a “done deal,” an official said Thursday,
despite Washington’s desire for close relations with re-elected Prime Minister
Narendra Modi.
The United States on
Thursday said India’s suspension from the list of countries benefiting from a
duty-free import scheme that was announced in March is a “done deal”, but left
the door open for restoring the benefits when India yielded, conceding more access
to its markets to American firms.
Previewing Trump
administration’s vision for US-India ties under Prime Minister Narendra Modi’s
new government, a senior administration official also warned of the “very
serious” Turkey-like “conversations” if India goes ahead with its planned
purchase of Russian S-400 missile defense systems.
The official began by
welcoming, pointedly, Modi’s post-election remarks “that have emphasized
inclusivity … that there should be no distinction between Indian citizens”, and
went on to describe the relationship between Modi and Trump as “warm”, and the
one between two countries as “resilient”.
The official’s
remarks on the duty-free import scheme, Generalized System of Preferences, that
it is a “done deal” and its time to move on runs counter to the understanding
in India, broached and bolstered by officials, that there is still a window of
opportunity for negotiations to prevent termination t from going into effect.
“There is every
reason to believe that the GSP suspension will move forward,” the official
said. The next step, 60 days from the March notification to congress of the
administration’s intention to suspend or withdraw/GSP benefits for India, is a
presidential memorandum, which has been due since May 4.
That does not rule
out, the official added, that in the future if India was able to “achieve the
reforms in market access that we need under this programme to restore the
benefits”.
For the present, the
official went on, “I think we need to be looking forward to how do we relaunch
an ambitious set of discussions between our trade teams to address these
outstanding irritants.”
The chief irritant is
access to certain Indian markets. The United States announced plans to withdraw
India’s GSP benefits on March 4 citing India’s failure to provide an assurance
it will provide “equitable and reasonable access” to its markets — mainly, for
now, dairy and medical devices — to American companies. This is the key trade
irritant for the United States, along with Indian data-localization (mandating
foreign IT companies to store Indian operations data on India-based servers)
and e-commerce rules (regulating online retailers’ supply chains to prevent
monopolistic practices).
India has been the
largest beneficiary of the GSP programme, which allows certain imports from 120
countries to enter the United States at zero tariff. It sold an estimated $6.3
billion worth of goods to the United States under this programme in 2018 ,
according to a new report by the Congressional Research Service, a non-partisan
source of research, analysis and projections for US lawmakers.
Withdrawal of
zero-tariff benefits would subject these products, presuming their volumes
remain unaffected, to $190 million, according to official Indian estimates. But
people familiar with these discussions fear the new tariff would make these
products costlier for US importers, who could then switch from Indian suppliers
to those who can supply for less, minus the tariff, to keep down their prices.
The message to the
new Modi government was equally tough on its planned purchase of Russian
S-400s. “You can take a look at the very serious conversation taking place with
our NATO partner Turkey and same concerns will apply should India proceed with
its S-400 purchase,” the official said.
The United States has
threatened to deny Turkey, a NATO ally which has pursued plans to acquire
S-400s disregarding American warnings, the latest defense hardware including
F-35, the cutting-edge next generation American-made fighter aircraft in the
western alliance.
Defense purchases,
the official said framing US objection to India’s Russian acquisitions in a
broader strategic framework, are no longer a routine “a la carte” shopping
spree. At the highest level of military technology cooperation and transfer,
the official sad, it’s more about “with whom you are inter-operable, with whom
you are sharing information platforms”. India has signed a bunch of agreements
with the US in recent years that dramatically increase defense ties, with an
undeclared emphasis on drawing India away from its historically largest
supplier of defense equipment, the Soviet Union, now Russia.
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