India on Thursday stated that it did still meet the criteria for the trade concessions United States granted to several developing nations under the Generalized System of Preferences (GSP) programme and the decision of President Donald Trump's administration to strip it off the privilege earlier last year had been a unilateral move.
Foreign Secretary Vijay Gokhale underlined India's eligibility for GSP trade privileges for duty-free exports of certain products to the US, just a day after American President himself hinted that he might make an announcement during his joint appearance with Prime Minister Narendra Modi at the “Howdy! Modi” event in Houston on Sunday.
Gokhale added that the US should also withdraw the tariffs it had unilaterally imposed on import of steel and aluminium from India under the Section 232 of the America's Trade Expansion Act of 1962.
"It has always been India's position that the GSP is a unilateral decision given by countries to other countries based on certain criteria. We are a developing country. We meet those criteria,” Foreign Secretary said, while briefing media-persons about Prime Minister's visit to the US from September 21 to 28. "To my recollection, the United States unilaterally withdrew that concession from us. Ultimately, it is a matter for the US to take a call on," he said, replying to a query on the possibility of the US restoring India's GSP beneficiary status during the visit of Prime Minister to Houston and New York.
A bipartisan group of as many as 44 members of American Congress – 26 Democrats and 18 Republicans – recently wrote to US Trade Representative, Robert Lighthizer, requesting him to restore the GSP beneficiary status of India, if not fully, at least partially, in case of progress in negotiations with New Delhi.
Lighthizer is leading Trump Administration's trade negotiation with New Delhi.
Gokhale on Thursday said that the Government of India had seen reports about the letter written by the members of the American Congress to the US Trade Representatives.
“Could be. I have a very good relationship with Prime Minister Modi,” media-reports quoted the US President saying on board his Air Force One aircraft, in response to a query from journalists if any announcement could be made by American Government before or during his appearance at “Howdy! Modi” event in Houston.
Gokhale said in New Delhi that Prime Minister and US President would also hold a bilateral meeting on the sideline of the United Nations General Assembly in New York next week, in addition to addressing Indian-Americans in Houston.
The GSP privilege granted by the American government allowed the beneficiary developing countries to export nearly 2,000 products, including auto components and textile materials, duty-free to the US. India was granted the privilege in 1976 and its export to the US under the GSP programme was worth $ 5.7 billion in 2017.
Trump Administration, however, started an eligibility review of India’s compliance with the GSP market access criterion in April 2018. The review was initiated in response to “a wide array of trade barriers” that Washington D.C. accused New Delhi of imposing on US exports to India. The office of the US Trade Representative finally on June 5 this year withdrew the GSP privilege granted to India. New Delhi retaliated by imposing additional tariff on import of 28 products from the US to India.
With Prime Minister visiting New York and Houston, India and the US officials are discussing the possibility of clinching a deal, addressing at least some of the trade concerns of both sides. Sources in New Delhi told the DH that the trade deal being negotiated by the two sides might be limited in scope, but would possibly include a US commitment to restore, if not fully, at least partially, the GSP beneficiary status for India and New Delhi’s pledge to withdraw the retaliatory tariff on imports from America.
The US has been complaining about imbalance in its trade with India.
Trump in February 2018 expressed his displeasure over high import duty imposed by India on high-end motorcycles like the ones made by Harley-Davidson and other US companies. During his visit to New Delhi last May, American Secretary of Commerce, Wilbur Ross, pointed out that the US was India's largest export market and accounted for about 20% of its total export. Yet, he added, India was only the 13th largest export market of the US, “due to overly restrictive market access barriers”.
Modi-Trump meeting on the sideline of the G-7 summit at Biarritz in France on August 27 however saw both sides expressing willingness to make efforts to address each other’s trade concerns. Prime Minister conveyed to the US President that India had last year for the first time imported oil and gas worth $4.5 billion from America and was keen to buy more this year and the coming years.
Prime Minister is likely to meet top executives of 16 US energy companies, like BP PLC and Exxon Mobil Corp, soon after his arrival in Houston on Saturday. He will have another meeting with the senior executives of about 45 US companies in New York on Wednesday.
New Delhi’s envoy to Washington D.C., Harsh Shringla, recently said that bilateral trade between India and the US had the potential to double and reach $ 280 billion in the next five years.
The overall India-US bilateral trade in goods and services has increased from $126 billion in 2017 to $142 billion in 2018.