4 June 2019
U.S. Terminates Duty-Free Benefits for India
President Trump issued a proclamation on 31 May rescinding India’s designation as a beneficiary country under the Generalised System of Preferences, effective 5 June. As a result of this action, many thousands of products from India are no longer eligible for duty-free treatment in the United States, potentially enhancing the competitiveness of other suppliers in products where India is an important supplier.
India was by far the largest U.S. GSP beneficiary in 2018, with total imports under the programme totalling US$6.3 billion. It exported the broadest variety of products by any country under the programme, with shipments in 1,944 separate tariff lines. Leading products included jewellery and stone articles, chemicals and pharmaceuticals, food and agricultural products, and a wide range of manufactured goods such as automotive parts, metals, GSP-eligible textile and leather products, and plastic products.
On 4 March, President Trump had provided a 60-day notice to Congress of his intent to remove both Turkey and India from the GSP programme. In India’s case, U.S. concerns revolved around that country’s market access regime for U.S. imports. Turkey was removed from GSP effective 17 May while India had asked that any GSP removal be delayed until the completion of its national elections, which wrapped up on 19 May.
India’s US$6.3 billion worth of GSP exports accounted for about 11 percent of total exports to the United States, leading U.S. trade associations whose members import from India to decry this action as a tax increase through additional tariffs of US$300 million per year. The India GSP proclamation also applies the U.S. safeguard actions on photovoltaic cells and large residential washers to India, as was done earlier in the proclamation on Turkey.