Current Affair Diary 12/11/2020

Generalized System of Preferences (GSP)

✓India is likely to press Biden Administration for early restoration of the Generalized System of Preferences (GSP) trade privilege for India.

✓The privilege was withdrawn by outgoing President Donald Trump’s administration in Washington DC in June 2019 and India has been prodding the United States to restore it.

✓It is a U.S. trade program designed to promote economic growth in the developing world by providing preferential duty-free entry for up to 4,800 products from 129 designated beneficiary countries and territories.

✓GSP was instituted on January 1, 1976, by the Trade Act of 1974.
✓GSP has been given on non-reciprocal basis. Yet the US has linked it with market access and tariff reduction which is against the basic tenets of GSP.

✓The objective of GSP was to give development support to poor countries by promoting exports from them into the developed countries.

✓GSP promotes sustainable development in beneficiary countries by helping these countries to increase and diversify their trade with the United States.

✓Indian exporters benefit indirectly – through the benefit that accrues to the importer by way of reduced tariff or duty free entry of eligible Indian products

✓Reduction or removal of import duty on an Indian product makes it more competitive to the importer – other things (e.g. quality) being equal.
✓This tariff preference helps new exporters to penetrate a market and established exporters to increase their market share and to improve upon the profit margins, in the donor country.

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22/11/2020
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