Topic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment. Effect of policies and politics of developed and developing countries on India’s interests.
6) What do you understand by Generalized System of Preferences (GSP)? Discuss the features in detail. Quote the reasons for which US withdrew GSP with India the repercussions of the same and what should India do?(250 words)
Why this question:
The article brings out a detailed discussion of Generalized System of Preferences (GSP), US-India trade relations amidst US’s withdrawal from GSP with India. 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.
Key demands of the question:
The answer should discuss the concept of Generalized System of Preferences (GSP), reasons of failure of the agreement between India and US, what are the repercussions of the same on India and what should India do to overcome the concerns posed by such a system.
Discuss – This is an all-encompassing directive – you have to debate on paper by going through the details of the issues concerned by examining each one of them. You have to give reasons for both for and against arguments.
Structure of the answer:
Define what you understand by GSP.
Answer must discuss the following:
- The Generalized System of Preferences (GSP) is a U.S. trade program designed.
- Discuss its Features – These are unilateral, non-reciprocal and non-discriminatory benefits extended by U.S. to promote economic growth in the developing world by providing preferential duty-free entry for up to 4,800 products from 129 designated beneficiary countries and territories.
- Timeline: GSP was instituted on January 1, 1976, by the Trade Act of 1974. The GSP program has effective dates which are specified in relevant legislation, thereby requiring periodical reauthorization in order to remain in effect.
- Explain that the US terminated preferential tariffs to Indian exports after determining that it has not committed to provide “equitable and reasonable access to its markets” for the US.
- Some of the key reasons cited by trump administration are trade imbalance with India, no access to Indian market for us dairy, medical device industry and issues related to data localization norms.
- Benefit Restoration: 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 recognized worker rights and providing adequate and effective intellectual property rights protection.
However, reinstatement of GSP benefits is conditional.
Conclude with what should be India’s way forward.