WASHINGTON: US President Donald Trump has ended India's designation as a beneficiary developing nation under a key trade preference programme after determining that India has not assured the US of providing "equitable and reasonable access to its markets."
The Generalized System of Preference (GSP) is the largest and oldest US trade preference programme and is designed to promote economic development by allowing duty-free entry for thousands of products from designated beneficiary countries.
"I have determined that India has not assured the US that it will provide equitable and reasonable access to its markets. Accordingly, it is appropriate to terminate India's designation as a beneficiary developing country effective June 5, 2019," Mr Trump said in a proclamation on Friday, ignoring the plea made by several top American lawmakers as it will cost American businesses over $300 million in additional tariffs every year.
On March 4, Mr Trump announced that the US intends to terminate India's designations as a beneficiary developing country under the GSP programme. The 60-day notice period ended on May 3.
The Trump administration has prioritised working with the Indian government to ensure that US companies have a level-playing field, a senior State Department official told reporters on Thursday, hours after Prime Minister Narendra Modi was sworn in for a second time following his spectacular electoral victory in the general election.
Under the GSP programme, nearly 2,000 products including auto components and textile material can enter the US duty-free if the beneficiary developing countries meet the eligibility criteria established by the US Congress.
India was the largest beneficiary of the programme in 2017 with $5.7 billion in imports to the US given duty-free status and Turkey the fifth largest with $1.7 billion in covered imports, according to a Congressional Research Service report issued in January.
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