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India-US trade ties won’t

be business as usual

News & Removing India from Generalized System of Preferences programme
that gives developing countries easier access to US markets may
views come at a time when New Delhi needs Washington’s support the most

Bharat hiteshi
he United States of America status to India is that our country is
Hiteshi is an has expressed its inten- not blindly following the Trump policy
independent journalist- tion to remove India and to corner China. Of late US President
turned-author and a Turkey from the General- Donald Trump has issued threats to
political commentator. ized System of Preferences impose sweeping tariffs on China for its
The views expressed T (GSP) programme that gives alleged unfair trade practices. So far, the
are his own developing countries easier access to US US has already slapped tariffs on US$250
markets. Why has Trump administration billion worth of Chinese products and
slapped a 60-day notice on India and has threatened tariffs on US$267 billion
what would be its implication on India- more.
US trade? The trade war between to big pow-
Why has the US chosen this moment ers could be understood from the fact
to terminate India’s benefits under the that China, on its part, has set tariffs on
generalized system of preferences? US$110 billion worth of US goods, and is
The fact is that in the current security threatening measures that would affect
environment, India needs the backing of US businesses operating in China.
the US, which has chosen a time to strike With neither Trump nor Chinese
on trade when India is vulnerable in its President Xi Jinping willing to back
international relations. down, US-China trade tensions could
President Donald Trump wrote in erupt into a full trade war wit China’s
a letter to the heads of the House of Ministry of Commerce warned that the
Representatives and the Senate “I am dispute may even lead to “the largest
providing notice of my intent to ter- trade war in economic history to date”.
minate the designation of India as a Information collected suggests that total
beneficiary developing country under US tariffs applied exclusively to China
the Generalized System of Preferences are to the tune of US$250 billion, while
(GSP) program.” The president added total Chinese tariffs applied exclusively
that he had “determined that India has to the US were to the tune of US$110
not assured the United States that it will billion. Surely it has affected growth in
provide equitable and reasonable access China.
to the markets of India”. In addition to not to follow the foot-
The GSP allows duty-free imports of steps of the US in its relations with China,
around 2,000 products, including tex- India has violated a recent US law that
tiles and auto parts. India is the biggest prohibits defence deals with Russia and
beneficiary of the programme and ac- energy trade with Iran. The Indian Com-
cording to US government data, in 2017; merce Secretary has been sanguine, esti-
$5.7 billion of India’s exports were under mating that impact at about 1,500 crore
this preferential system. on roughly 40,000 crore of exports to
the US under the GSP scheme. That may
The China factor? be widely off the mark since this is just
Foreign Affairs experts suggest that the additional duty that has to be paid
India the main reason by the US intends by exporters. They will lose much more
to end beneficiary developing country when their goods are pegged higher

Tehelka / 31 march 2019 58 www.Tehelka.com