European and international business associations representing apparel and footwear brands and importers have voiced concerns over the US’s plans to terminate India’s Generalized System of Preferences (GSP) status and urged it to extend talks to reach a “mutually agreeable” solution.
In a joint letter addressed to United States Trade Representative (USTR) Robert Lighthizer, 24 business associations – including the American Apparel & Footwear Association (AAFA), Footwear Distributors and Retailers of America (FDRA), National Retail Federation (NRF), Outdoor Industry Association (OIA), and Retail Industry Leaders Association (RILA) – address the Administration’s recent decision to terminate Generalized System of Preferences (GSP) benefits with respect to US imports from India.
US President Donald Trump announced plans to terminate the eligibility of India and Turkey as beneficiary developing countries under the Generalized System of Preferences (GSP) last month. While it is understood the changes will not take effect until at least 3 May and will be enacted by a presidential proclamation, once that proclamation takes effect, thousands of products imported from the two countries will no longer be eligible for duty-free treatment under GSP.
The President said India is being terminated from GSP because it has not assured the US that it will provide equitable and reasonable access to its markets. A note from the office of the USTR explained that India has implemented a wide array of trade barriers that “create serious negative effects on US commerce.”
Last month, trade associations from the apparel sectors of both countries appeared unmoved, but now the cohort of European and international business associations say GSP revocation or suspension in the middle of the Indian elections will not achieve its intended goal of applying pressure for reform.
“Rather, it is likely to exacerbate political differences over trade issues, trigger retaliatory actions by the government of India, and undermine the business climate for US businesses trading with and doing business in India,” the group warns.
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By GlobalDataIt adds at the same time, withdrawal of India’s GSP status will have an “adverse impact on many US workers who now depend on global value chains that use imports from India.” The ability to import items on a duty-free basis, including inputs used for manufacturing in the US, means US companies can invest those tariff savings into US jobs or pass them along to US consumers, it explains.
In addition, the group says the action seems to disregard the way in which the GSP programme helps lift “hundreds of millions of people out of extreme poverty, as we have witnessed since its inception in 1974.”
It continues: “In fact, Congress prioritised this development imperative, as the original intent of GSP was to “further…the economic development of developing countries through the expansion of their exports” and years later in its renewal remained “to assist their economic development and diversification through preferential market access.
“It is our hope that we can still support US jobs on both sides of the trade ledger by preserving India’s GSP status and continuing negotiations past the 60-day window triggered by the White House’s 4 March notice of its intent to terminate India’s GSP benefits.
“Therefore, we urge that any final revocation or suspension be deferred for at least 60 days to allow the new government to appoint officials to engage in bilateral negotiations. Such a move would preserve those jobs that currently depend on US-Indian trade while producing an action-forcing event that will afford a further opportunity to address the trade issues that led to this decision.”
The US GSP scheme is designed to promote economic growth in the developing world by providing preferential duty-free entry for up to 4,800 products from 120 designated beneficiary countries. While the GSP programme excludes most textile and apparel products exported to the US, the designation of a country as eligible for GSP sends a strong message that it is taking steps to improve worker and intellectual property rights.
