· The Generalized System of Preferences is the largest and oldest United States trade preference programme.
· The U.S. intended it to promote economic development by eliminating duties on some products it imports from the 120 countries designated as beneficiaries.
· It was established by the Trade Act of 1974. It helps spur sustainable development in beneficiary countries by helping them increase and diversify their trade with the U.S.
· The GSP is also important to U.S. small businesses, many of which rely on the programmes’ duty savings to stay competitive.
· The loss for the Indian industry amounts to about $190 million on exports of $5.6 billion falling under the GSP category. Specific sectors, such as gem and jewellery, leather and processed foods will lose the benefits of the programme.
· A producer may be able to bear 2-3% of the loss from the change. The loss, in export of some kinds of rice for example, may even exceed 10%.
· The landed price of goods from India has to be the same as it was before the GSP was removed.
· A periodic review of the programme was conducted by the U.S. which focused on ‘whether India is meeting the eligibility criterion that requires a GSP beneficiary country to assure the U.S. that it will provide equitable and reasonable access to its market.’
· The Trade Representative accepted two petitions asserting that India did not meet the criterion: one from the National Milk Producers Federation and the U.S. Dairy Export Council, and the other from the Advanced Medical Technology Association.
· India wants dairy products, which could form part of religious worship, certified that they were only derived from animals that have not been fed food containing internal organs. Other exporters such as EU nations and New Zealand certify their products, but the U.S. has so far not done so.
· Second, India has recently placed a cap on the prices of medical devices, like stents, that impacts U.S. exports of such devices.
· The Indian government must offer fiscal help to the affected sectors.
· It is possible to offer some breather to producers suffering losses from the GSP removal, even while being WTO-compliant.
· The Centre could consider refund of taxes for goods not under GST.
· Use of electricity or petrol in the manufacture of such goods but for which an input credit is not available could qualify here. Helping such sectors would also protect jobs; especially when job creation is at a low.
Source : The Hindu
10.03.2019