Generalized System of Preferences(GSP)

India’s GSP Donald Trump terminates

Generalized System of Preferences(GSP)

Donald Trump terminates India’s Generalized System of Preferences(GSP) program

The administration of the United States GSP programme can be divided into two distinct areas. The day-to-day operation of the programme is primarily the responsibility of the United States Customs Service, which is part of the Department of the Treasury (appendix 3 for the regulations that govern the Customs Service’s implementation of the
programme).India’s GSP

India's GSP

While many of the policy issues in the GSP are theoretically decided by the President of the United States, in reality the latter’s decisions are made on the basis of advice provided
by the Office of the United States Trade Representative (USTR) and other agencies (see appendix 4 for the regulations that govern the USTR’s conduct of GSP reviews). The address of the USTR’s GSP office is as follows:Generalized System of Preferences(GSP)

Office of the United States Trade Representative
USTR Annex
1724 F Street, NW
Washington, DC 20508
Tel.: +1 202 395 6971; Fax: + 1 202 395 9481

The USTR consults with other United States Government agencies on all important issues affecting the GSP. The GSP Subcommittee of the Trade Policy Staff Committee is
responsible for recommending to the President the actions he should take on petitions that seek changes in the programme’s members from all government agencies with an interest in international economic relations (e.g. the Departments of State, Commerce, Labor,
etc.).Generalized System of Preferences(GSP)

Beneficiary Country India’s GSP

The GSP Subcommittee conducts annual reviews of the GSP programme, in which it considers a wider range of petitions. Any interested party – embassies, Government
agencies, United States foreign firms, and so forth – may petition the GSP Subcommittee to request modifications in the list of products or countries eligible for GSP treatment. A beneficiary country can use this annual review to ask that the subcommittee add a product to the GSP, or that it waives the limits that apply to imports of a specific product.

Other interested parties variously ask that the subcommittee add a product to the GSP, remove a
product from the programme, remove a specific country’s eligibility for a specific product, or remove a country altogether from the GSP. The GSP Subcommittee usually
decides within several weeks which of these petitions it will accept for review.

The petitions that are accepted for review are then subject to a months-long process of hearings, advice from the United States International Trade Commission (USITC), and internal deliberations; the petitions that are not accepted die at this point.Generalized System of Preferences(GSP)

GSP India’s GSP

While some industrialized countries’ GSP schemes provide for varying levels of preferential treatment, this aspect of the United States programme is much simpler. All
products that are eligible for preferential treatment enter entirely free of duty. For an import to qualify for duty-free treatment under the GSP, it must meet the following three
(a) It must be from a designated beneficiary country;
(b) It must be eligible for GSP treatment; and
(c) It must meet the GSP rules of origin.

Each of these points is worth examining separately. In addition to reading the description that follows, readers are encouraged to examine the laws and regulations in the
appendices. Appendix 2 reproduces the full text of the authorizing legislation for the GSP in the United States Code, while appendix 3 consists of the United States Customs Service rules on the GSP (from the Code of Federal Regulations).Generalized System of Preferences(GSP)

A. Country eligibility India’s GSP

Many, but not all, developing countries and territories are designated as GSP beneficiaries (see the appendices for the status of independent and non-independent
countries and territories (appendix 1) under the United States programme). Country eligibility has evolved considerably over the past quarter of a century (see figure)

1). The original GSP statute excluded Communist countries (other than Yugoslavia) and OPEC members, but both of those restrictions were later relaxed. Ecuador, Indonesia and the Bolivarian Republic of Venezuela were designated for the GSP in 1980 (being OPEC countries that had not joined in the Arab countries’ oil embargo), and most former Soviet republics and satellites won GSP benefits with the end of the Cold War.Generalized System of Preferences(GSP)

Other economies have been “graduated” from the GSP upon achieving sufficiently high levels of income and development: the four main Asian newly industrialized economies (i.e. Hong Kong (China), Republic of Korea, Singapore and Taiwan Province of China) were graduated in 1989, and Malaysia was graduated in 1998. Mexico lost GSP when the North American Free Trade Agreement (NAFTA) entered into effect in 1994. Other countries have seen their benefits reduced, suspended or terminated as a result of disputes over workers’ rights and other matters, as discussed in a later section.

United State Programme

The United States programme distinguishes between two categories of countries. Forty four countries are considered by the United States to be least developed beneficiary
countries, as identified in

appendix 1. These countries enjoy two advantages not shared by the other beneficiaries: a much wider range of products that are eligible for GSP treatment (as discussed in section II.B), and they are not subject to the competitive need limitations (as discussed in section III).
The law provides that a beneficiary country can be graduated completely from the programme if “the President determines that a beneficiary developing country has
become a ‘high income’ country, as defined by the official statistics of the International Bank of Reconstruction and Development (the World Bank)”. This provision has been
used to graduate several Asian newly industrialized economies, among others.Generalized System of Preferences(GSP)

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