GS MAINS 2013 special : Editor - Desk of PEARSON ETEN IAS (www.etenias.com) : Puneet
India presses U.S. for renewal of GSP scheme Aug 21, 2013
India has taken up with United States the issue for immediate renewal of the legal authorisation of the US Generalised System of Preferences (GSP) programme, which expired on July 31 this year, to avoid any adverse impact on trade exchanges between the two countries.
Background : What is Generalized System of Preferences (GSP)?
The Generalized System of Preferences, or GSP, is a formal system of exemption from the more general rules of the World Trade Organization (WTO), (formerly, the General Agreement on Tariffs and Trade or GATT). Specifically, it's a system of exemption from the most favored nation principle (MFN) that obliges WTO member countries to treat the imports of all other WTO member countries no worse than they treat the imports of their "most favored" trading partner. In essence, MFN requires WTO member countries to treat imports coming from all other WTO member countries equally, that is, by imposing equal tariffs on them, etc. GSP exempts WTO member countries from MFN for the purpose of lowering tariffs for the least developed countries, without also lowering tariffs for rich countries.
The United States and GSP
The Generalized System of Preferences (GSP) 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. It helps in keeping products `made in America’ competitive for both domestic consumption as well as U.S. exports. The U.S. jobs and corporate interests are equally linked to the renewal of GSP program.
How would GSP aid trade prospects of the third world?
The GSP program helps developing countries expand their economies by increasing exports to the U.S. It also aids U.S. businesses by lowering the cost of imported goods that are used as inputs in value-added US production. U.S. businesses imported $19.9 billion worth of products under the GSP program in 2012, including many inputs used in U.S. manufacturing. As per the recently released Trade Policy Agenda of the U.S. administration, helping developing countries grow and expand their economies through trade would also help the U.S. by providing its exporters greater opportunity to sell products to billions of new consumers abroad.
GSP Renewal & India
Experts are of the view that timely renewal of GSP is very important to maintain stable bilateral trade between the two countries and to avoid uncertainty in quoting/bidding for any new business which will adversely affect the trade. The U.S. holds 16% of India’s total services imports. Indian imports of US services is expected to rise sharply in the coming years as India’s middle class market expands and key services sectors bring in further reforms.
References :
# http://www.thehindu.com/business/Economy/india-presses-us-for-renewal-of-gsp scheme/article5044988.ece
# http://en.wikipedia.org/wiki/Generalized_System_of_Preferences
# https://help.cbp.gov/app/answers/detail/a_id/266/~/generalized-system-of-preferences-%28gsp%29
Questions
1. Describe what is called the Generalised system of preferences?
2. Why is India keen to renew the Generalised System of Preferences with US on the backdrop of a depreciating rupee?
India presses U.S. for renewal of GSP scheme Aug 21, 2013
India has taken up with United States the issue for immediate renewal of the legal authorisation of the US Generalised System of Preferences (GSP) programme, which expired on July 31 this year, to avoid any adverse impact on trade exchanges between the two countries.
Background : What is Generalized System of Preferences (GSP)?
The Generalized System of Preferences, or GSP, is a formal system of exemption from the more general rules of the World Trade Organization (WTO), (formerly, the General Agreement on Tariffs and Trade or GATT). Specifically, it's a system of exemption from the most favored nation principle (MFN) that obliges WTO member countries to treat the imports of all other WTO member countries no worse than they treat the imports of their "most favored" trading partner. In essence, MFN requires WTO member countries to treat imports coming from all other WTO member countries equally, that is, by imposing equal tariffs on them, etc. GSP exempts WTO member countries from MFN for the purpose of lowering tariffs for the least developed countries, without also lowering tariffs for rich countries.
The United States and GSP
The Generalized System of Preferences (GSP) 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. It helps in keeping products `made in America’ competitive for both domestic consumption as well as U.S. exports. The U.S. jobs and corporate interests are equally linked to the renewal of GSP program.
How would GSP aid trade prospects of the third world?
The GSP program helps developing countries expand their economies by increasing exports to the U.S. It also aids U.S. businesses by lowering the cost of imported goods that are used as inputs in value-added US production. U.S. businesses imported $19.9 billion worth of products under the GSP program in 2012, including many inputs used in U.S. manufacturing. As per the recently released Trade Policy Agenda of the U.S. administration, helping developing countries grow and expand their economies through trade would also help the U.S. by providing its exporters greater opportunity to sell products to billions of new consumers abroad.
GSP Renewal & India
Experts are of the view that timely renewal of GSP is very important to maintain stable bilateral trade between the two countries and to avoid uncertainty in quoting/bidding for any new business which will adversely affect the trade. The U.S. holds 16% of India’s total services imports. Indian imports of US services is expected to rise sharply in the coming years as India’s middle class market expands and key services sectors bring in further reforms.
References :
# http://www.thehindu.com/business/Economy/india-presses-us-for-renewal-of-gsp scheme/article5044988.ece
# http://en.wikipedia.org/wiki/Generalized_System_of_Preferences
# https://help.cbp.gov/app/answers/detail/a_id/266/~/generalized-system-of-preferences-%28gsp%29
Questions
1. Describe what is called the Generalised system of preferences?
2. Why is India keen to renew the Generalised System of Preferences with US on the backdrop of a depreciating rupee?
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