GENERALIZED SYSTEM OF PREFERENCES (GSP)

About: 

• What is it? The Generalized System of Preferences (GSP) is a U.S. trade program designed.
  
  
• Features: These are unilateral, non-reciprocal and non-discriminatory benefits extended by U.S. 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.
  
  
• Timeline: GSP was instituted on January 1, 1976, by the Trade Act of 1974. The GSP program has effective dates which are specified in relevant legislation, thereby requiring periodical reauthorization in order to remain in effect.
  
  

Recent decision:

• The US terminated preferential tariffs to Indian exports after determining that it has not committed to provide “equitable and reasonable access to its markets” for the US. 
  
  
• Some of the key reasons cited by trump administration are trade imbalance with India, no access to Indian market for us dairy, medical device industry and issues related to data localisation norms.
  
  

Benefit Restoration:

• As per US norms, a beneficiary country must meet 15 discretionary and mandatory eligibility criteria established by Congress to qualify for GSP.
  
  
• These include providing the US with equitable and reasonable market access, combating child labour, respecting internationally recognised worker rights and providing adequate and effective intellectual property rights protection.
  
  
• However, reinstatement of GSP benefits is conditional.