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said a person close to the negotiations.
In June last year too, US President
Donald Trump had abruptly an-
nounced a hike in customs duties on
some steel and aluminium products.
Responding to this, the Centre had
decided to levy tariffs on products like
almonds and apples but its implemen-
tation was deferred more than five
times as India hoped to secure a good
trade deal from the US.
Why US move?
The GSP withdrawal came after Trump
called India a ‘tariff king’, saying that
the government imposes ‘tremen-
dously high’ tariffs on American prod-
ucts. The US government said it did not
receive any assurance from India that
it will be given reasonable access to the
Indian market. Due to preferential tar-
iffs ranging from a percent to six per-
cent, the total benefit from the scheme
was close to $190 million. The scheme estimates from the Central Statistics • Trade curbs The Trump administration
also ensured non-discriminatory trade Office point to a slowdown. The GDP recently notified Congress that it wants to
practices between the two countries. growth is projected to have eased to scrap trade concessions for India
Commerce Secretary Anup Wad- 6.6 per cent in the October-December
hawan observed that he wondered, period. At that level, growth would benefits under the preference regime.
“why the US government took this step have slowed to a seven-quarter low This will help offset the erosion of the
despite India working towards a mutu- and slowest pace of annual growth for GSP tariff advantage and facilitate the
ally beneficial and reasonable trade the present government in India. The retentioof their market share in the
package”. The Commerce Ministry said cause of concern is the farm sector, US. If need be, the government could
the Centre’s deal would have given which slowed to 2.7 per cent in the provide some financial support as an
the US reasonable access to various last quarter, from a 4.2 per cent pace emergency measure to these sectors in
markets like agriculture and animal in July-September and 4.6 per cent a the form of export subsidies. In July last
husbandry along with relaxation in year earlier. Manufacturing is another year, India had announced its inten-
procedures related to telecom testing cause of concern with growth for the tion to impose retaliatory tariffs on the
and tariff cuts in information and com- sector pegged at 6.7 per cent, weaker US.
munications technology (ICT) products than the 6.9 per cent posted in the sec- However, India has refrained from
but on specific terms. ond quarter and a rapid deceleration imposing those retaliatory tariffs. With
India was willing to cut tariffs from the April-June’s 12.4 per cent. the preferential benefits being ter-
on ICT products, where there was a With tensions mounting at the bor- minated after a 60-day grace period,
direct US interest. Any other reduc- ders, the economy heading for a period there should be no trade-related rea-
tion could help a third party, especially of uncertainty and now US threatening son for India to hold back these tariffs.
China. India had adequate warning withdrawal preferential status, it’s not Overall, termination of India’s benefits
that the United States could terminate a good news because the sword hang- under the generalized system of pref-
important trade preferences to the ing over India’s preferential access for erences presages a bumpy road ahead
country. The US is reportedly unhappy its exports to the US market has finally in bilateral trade relations between
with India because India’s recent fallen. India and the US. The best course for
rules on e-commerce have inconven- both countries would be to continue
ienced Walmart and Amazon, both US Options available to talk and explore ways of resolving
companies. So, what are the options available to their trade issues and for Indian policy
The US decision would further India? India needs to enhance cost makers is to keepthe US engaged.
impact Indian economy because competitiveness in sectors likely to
India’s economy is slowing. The latest be adversely affected by the loss of letters@tehelka.com

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