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US: End of India trade preference ‘done deal’

President Trump with Prime Minister Modi in Washington on June 26, 2017. (Reuters)

A US decision to evict India from a key trade pact is a “done deal,” an official said Thursday, despite Washington’s desire for close relations with re-elected Prime Minister Narendra Modi.

President Donald Trump’s administration said in March it was removing India from the Generalized System of Preferences, which gives favorable access to goods from developing countries.

India, which had been the top beneficiary of the deal under which it exported $5.6 billion to the United States in 2017, protested that it could make no counter-proposals due to laws that forbid policy-making during the election season.

A senior US official voiced hope for warm relations with Modi after he led his Hindu nationalist party to an overwhelming re-election victory but said that the March decision would move forward.

“I think that suspension was a done deal. Now the task is how do we look ahead, how do we work under the second Modi administration to identify a path forward,” the official said on condition of anonymity.

“We believe there is enormous potential to grow our trade relationship and to help stimulate the jobs that Prime Minister Modi has committed to bringing to an overwhelmingly young Indian population,” she said.

The official said that India “remains one of the least open major economies in the world,” adding: “The Trump administration is committed to ensuring free, fair and reciprocal trade.”

The Trump administration said it was removing India from the GSP due to trade barriers and also terminating the status for Turkey on the grounds that it was no longer a developing country.

Trump has taken a tough line on trade even with US allies and has been especially incensed at Indian tariffs on high-end manufactured goods such as motorcycles.

In another major sticking point in negotiations that led to the decision, the United States had pressed India to loosen regulations on the import of US dairy products.

India had objected on cultural grounds as US cows are often fed blood meal from other cattle. As most Hindus do not eat beef, India unsuccessfully asked the US dairy industry to certify how the cows are fed.

The official nonetheless said that the United States hoped to boost relations with Modi, including on defense cooperation. Modi is scheduled to meet Trump in late June on the sidelines of a Group of 20 summit in Osaka.

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Last Update: Saturday, 1 June 2019 KSA 10:31 - GMT 07:31
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