NEW DELHI: India is in talks with the US for restoration of Generalised System of Preferences (GSP), mutual withdrawal of their disputes at the World Trade Organization and removal of higher tariffs on steel and aluminium by Washington, as the two sides work to resolve their bilateral trade differences.
“We have been discussing various issues with the US such as GSP restoration, and withdrawal of their Section 232 tariffs and our retaliatory duties,” said an official. The two sides have been engaged in talks to iron out the differences, which began last year when the US levied global additional tariffs of 25% and 10% on the import of steel and aluminium products, respectively.
India responded by levying retaliatory tariffs on 28 products originating or exported from the US with effect from June 16, for which Washington dragged it to dispute at WTO. Talks collapsed after the US withdrew incentives to $6.3 billion of Indian exports under the GSP programme effective June 5. Prime Minister Narendra Modi is travelling to the US later this month to attend the UN General Assembly.
Commerce minister Piyush Goyal is also likely to visit Washington soon. Officials said while the economic impact of GSP withdrawal on India’s exports is not significant, these issues have longterm strategic implications and should not become deal breakers.
MIXED IMPACT
Indian exporters of chemicals, engineering goods, leather, and gems & jewellery have been impacted by the withdrawal.
But some exporters said the impact was not much. “We understand that GSP is given to developing countries, which meet eligibility norms, and it was a benefit for us,” a Mumbai-based exporter of chemicals said. “However, with the US also raising tariffs on Chinese chemicals, the withdrawal has not impacted us much.”
The preferential tariffs under the GSP on Indian exports range between 1% and 6%. Trade experts said while GSP can not be completely ignored, New Delhi must be cautious of what can be given in return. “The GSP withdrawal may be hurting some sectors but, at the same time, it is not worth giving concessions on intellectual property rights and ecommerce because that would do long-term damage,” said a Delhi-based expert on trade issues.
Another expert explained that the absence of GSP is a blow to India’s competitive advantage at a time when US-China trade war has thrown open more opportunity to increase trade but India must carefully weigh its options.
Source: economictimes.indiatimes.com