No zero-sum games: on India-U.S. trade
hostilities (The Hindu)
Mains Paper 1: International Relations
Prelims level: Zero tariff
Mains level: India – USA relations and tariff regulations
- In India over a possible decision by the U.S. Trade Representative
to withdraw the Generalised System of Preferences status.
- Under this, India is able to export about 2,000 product lines to
the U.S. under zero tariff.
- The revocation of the GSP, which was first extended to India in
1976 as part of a global concession by the U.S. to help developing countries
build their economies, will be a blow to
- Indian exporters, and the biggest in a series of measures taken by the
Trump administration against India to reduce its trade deficit.
- President Donald Trump’s case on what he calls “unequal tariffs”
from India rests on the trade relationship in favour of India:
- Indian exports to the U.S. in 2017-18 stood at $47.9 billion,
while imports were $26.7 billion.
Beginning of the imposing tariffs
- In March 2018, the U.S. began imposing tariffs on several Indian
products, and in April, the USTR began a review of India’s GSP status, based
on complaints of trade barriers from India it had received from the dairy
industry and manufacturers of medical devices.
- In November the U.S. withdrew GSP status on at least 50 Indian
- India proposed tariffs of about $235 million on 29 American goods,
but has put off implementing these five times in the past year in the hope
that a negotiated trade settlement will come through.
- The latest deadline expires on March 1. India has also attempted
to address the trade deficit with purchase of American oil, energy and
- There have been dozens of rounds of talks between officials over
the past few months, but no breakthrough.
- U.S. officials say the decision on data localisation for all
companies operating in India, and the more recent tightening norms for FDI
in e-commerce have aggravated the situation.
- Both sides should work towards calling a halt to trade hostilities
and speed up efforts for a comprehensive trade “package”, rather than try to
match each concern product by product.
- The U.S. must realise that India is heading into elections, and
offer more flexibility in the next few months.
What is GSP?
- Generalized System of Preferences (GSP) is a preferential tariff
system under which developed nations extend reduced MFN tariffs (Most
Favoured Nation) or duty-free entry of certain goods into their markets, to
the developing nations.
- India must keep in mind that the larger, global picture is about
U.S.-China trade issues, and if a trade deal with the U.S. is reached, India
could be the biggest beneficiary of business deals lost by China.
- The visit of U.S. Commerce Secretary Wilbur Ross to India this
week will be watched not as much for substance, as for signals that New
Delhi and Washington understand the urgency in breaking the deadlock.
Q.1) SINBAX is a military exercise between India and which of the
(c) Sri Lanka
Q.1) India and the U.S. must work to halt trade hostilities urgently.