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June 1st 2019 PIB:-Download PDF Here
Withdrawal of India’s GSP benefits by USA
Context
- The United States of America (USA) has w.e.f. 5 June 2019 withdrawn India’s GSP benefits.
GSP
- According to the Office of the United States Trade Representative, US trade preference programs such as the Generalised System of Preferences (GSP) to provide opportunities for many of the world’s poorest countries to use trade to grow their economies and climb out of poverty.
- It is a preferential tariff system extended by developed countries to developing countries.
- Countries like the United States and United Kingdom, as well as the European Union give GSPs to imports from developing countries.
- GSP involves reduced/zero tariffs of eligible products exported by beneficiary countries to the markets of GSP-providing countries
Objective of GSP
- The objective of GSP was to give development support to poor countries by promoting exports from them into the developed countries.
- According to the US Trade Representative Office (USTR), GSP promotes sustainable development in beneficiary countries by helping these countries increase and diversify their trade with the United States.
Impact of GSP withdrawal on India
- India exports nearly 50 products of the 94 products on which GSP benefits may be stopped.
- The GSP removal will leave a reasonable impact on India as the country enjoyed preferential tariff on exports
- Removal of GSP indicates a tough trade position by the US; especially for countries like India who benefited much from the scheme.
- The US was insisting that India reduce its trade surplus. India is the 11th largest trade surplus country for the US.
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