Background

India is being terminated as a beneficiary developing country under the Generalized System of Preferences as of June 5. As a result, thousands of goods imported from India will no longer be eligible for duty-free treatment under GSP. India has been the largest user of GSP with $5.7 billion in shipments under the program in 2017.

President Trump issued a proclamation making this change following a determination that India has not assured the U.S. that it will provide equitable and reasonable access to its markets. The Office of the U.S. Trade Representative explained previously that India has implemented a wide array of trade barriers that “create serious negative effects on U.S. commerce,” including tougher rules on e-commerce marketplaces, efforts to force foreign companies to store data in India, and higher import tariffs on electronic products in apparent violation of India’s commitments under the World Trade Organization’s Information Technology Agreement.

Also effective June 5, the proclamation removes India from the list of developing country WTO members exempt (under certain conditions) from the section 201 safeguard tariff-rate quotas the U.S. imposed in January 2018 on crystalline silicon photovoltaic cells and large residential washing machines. Click here for details on these TRQs.

There had been speculation that the Trump administration might postpone the GSP termination, which was announced in March, to give India time to respond to its concerns following a recent election. According to press reports, India said it was “unfortunate” that its offers to address those concerns had been rejected and that its GSP eligibility had been withdrawn. However, India has so far declined to impose retaliatory tariffs on imports of U.S. goods, a step that has been under consideration in the context of both GSP and the U.S.’ Section 232 steel and aluminum tariffs.

For more information on this change and how to mitigate its impact, please contact trade consultant Nicole Bivens Collinson at (202) 730-4956.

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