Generalized System of Preferences (GSP) programme 31/05/2019 – Posted in: Daily News – Tags:

GENERALIZED SYSTEM OF PREFERENCES (GSP) PROGRAMME

 

For: Preliminary & Mains: GS-II, III

Topic covers: GSP – Functions, advantages, objectives, Impact on trade

 

News Flash

India will lose access to preferential trade terms with the U.S. under the latter’s Generalized System of Preferences (GSP) programme.

US stating his intention to withdraw GSP benefits for India, saying India had failed to assure the U.S. that it would provide ‘equitable and reasonable access to the markets of India’.

 

Trade impact

Indian exports to the U.S. worth $ 5.6 billion are covered by GSP, although India gets only $ 190 million in tariff savings. Nevertheless, the program impacts crucial Indian sectors including textiles, leather, engineering goods, gems and jewellery.

Removal of GSP indicate a tough trade position by the US; especially for countries like India who benefited much from the scheme.

India is the 11th largest trade surplus country for the US and India enjoyed an annual trade surplus of $ 21 bn in 2017-18.

In total India exports nearly 1,937 products to the US under GSP.

 

Generalized System of Preferences (GSP) programme

The GSP is the largest and oldest U.S. trade program designed to promote economic growth in the developing world by providing preferential duty-free entry for up to 4,800 products from 129 designated beneficiary countries and territories. GSP was instituted on January 1, 1976, by the Trade Act of 1974.

 

Objective of GSP

  • To give development support to poor countries by promoting exports from them into the developed countries.
  • GSP promotes sustainable development in beneficiary countries by helping these countries to increase and diversify their trade with the United States.
  • GSP also boosts American competitiveness by reducing costs of imported inputs used by U.S. companies to manufacture goods in the United States.

 

Source: The Hindu

 

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