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US to end preferential treatment terms to India in trade, India not to retaliate

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US to end preferential treatment terms to India in trade, India not to retaliate

[vc_row][vc_column][vc_column_text]In a move seen as a major setback to India-US bilateral relations in trade and economy, US President Donald Trump on Monday, March 4, told the US Congress he intended to terminate the designation of India and Turkey as beneficiary developing countries under the Generalised System of Preferences (GSP) programme.

The program, which sets zero tariffs for certain goods from a set of 120 developing countries in order to foster trade and economic development, accounts for some $5.6 billion of India’s exports to the US, making India the largest GSP beneficiary. Exports to the US from India under GSP — at $5.58 billion — were over 12 per cent of India’s total goods exports of $45.2 billion to the US.

The GSP programme allows duty-free entry of 1,784 products from India into the US, benefitting exporters of textiles, engineering, gems and jewellery and chemical products, said a media report.

In a letter to the Speaker of the US House of Representatives, Nancy Pelosi, Trump said that New Delhi had “not assured” the United States that it would “provide equitable and reasonable access” to the markets of India.

“I am taking this step because, after intensive engagement between the United States and the Government of India, I have determined that India has not assured the United States that it will provide equitable and reasonable access to the markets of India…” Trump said in a letter to the Speaker of the House of Representatives and President of the Senate, shared with reporters.

A mandatory 60 days must now pass after notice has been given to the beneficiary countries and to Congress, during which time there is, technically speaking, the possibility of negotiation. After the 60-day period, a beneficiary country can be taken off the GSP list by a presidential proclamation.

While Trump said in his letter that he “will continue to assess whether the Government of India is providing equitable and reasonable access to its markets, in accordance with the GSP eligibility criteria,” a re-negotiation of India’s place under the system is, however, unlikely, The Hindu reported quoting sources.

In a separate letter, Trump also informed the Congress of his intent to terminate the GSP beneficiary designation of Turkey. This was primarily because the economy of Turkey had improved a lot in the last four-and-a-half decades and is no longer a developing country.

“In the four-and-a-half decades since Turkey’s designation as a GSP beneficiary developing country, Turkey’s economy has grown and diversified,” he said.

Trump has had several disagreements with Turkey’s leader, Recep Tayyip Erdogan. His country’s once-robust economy has weakened, and that will likely be a key issue in local elections at the end of the month, said a Bloomberg report.

In a separate statement, the US Trade Representative (USTR) said India’s termination from GSP followed its failure to provide the US with assurances that it would provide equitable and reasonable access to its markets in numerous sectors. “India has implemented a wide array of trade barriers that create serious negative effects on United States commerce.  Despite intensive engagement, India has failed to take the necessary steps to meet the GSP criterion,” the United States Trade Representative (USTR) said on its website.

“By statute, these changes may not take effect until at least 60 days after the notifications to Congress and the governments of India and Turkey, and will be enacted by a Presidential Proclamation,” the USTR said.

Under the United States GSP programme, certain products can enter the US duty-free if the beneficiary developing countries meet the eligibility criteria established by Congress. The GSP criteria include, among others, respecting arbitral awards in favour of US citizens or corporations, combating child labour, respecting internationally recognised worker rights, providing adequate and effective intellectual property protection and providing the US with equitable and reasonable market access. Countries can also be graduated from the GSP programme, depending on factors related to economic development.

Points of friction

India’s new e-commerce rules, price controls on medical devices and tariffs on ICT (information and communications technology) products are among the issues that have caused trade frictions between the two countries. Trump has repeatedly taken shots at India’s tariffs, which he views as unreasonable. US commerce secretary Wilbur Ross recently raised concerns regarding new trade barriers created by India, hinting at the stringent e-commerce rules that affected US companies such as Amazon and Walmart-owned Flipkart.

The Trump Administration had launched an eligibility review of India’s compliance with the GSP market access criterion in April 2018. The USTR announced that it was reviewing the GSP eligibility of India, after the US dairy industry and the US medical devices industry requested a review of India’s GSP benefits, given India’s alleged trade barriers affecting US exports in these sectors. Total US imports under GSP in 2017 was $21.2 billion, of which India was the biggest beneficiary with $5.6 billion, followed by Thailand ($4.2 billion) and Brazil ($2.5 billion).

“India has implemented a wide array of trade barriers that create serious negative effects on United States commerce. Despite intensive engagement, India has failed to take the necessary steps to meet the GSP criterion,” the USTR said.

India to take it easy

The Indian government on Tuesday downplayed the effect of the decision by the United States government to withdraw trade concessions granted to India under the Generalised System of Preferences (GSP).

India’s Commerce secretary Anup Wadhawan, The Hindu reported, said that the impact would amount to $190 million on total export amount of $5.6 billion to the US.

He said disproportionate demands from the US led to the collapse of talks even though India was ready for greater market access in agricultural products to the US.

“The withdrawal of GSP benefits to India will have a minimal and moderate impact,” Wadhawan was reported to have said at a press conference. “The total GSP benefits amount to about $190 million on overall exports of $5.6 billion between the two countries.”

“We had worked out a meaningful package that covered the US’ concerns but they made additional requests which were not acceptable at this time,” he added.

Wadhawan added that India was still in talks with the US on the higher import duties that country charges on steel and aluminium, and said that India was still reviewing whether it would impose retaliatory tariffs or not. The government had in the middle of last year decided the list of items on which it would impose retaliatory tariffs, but has since then postponed the deadline of implementation six times, said The Hindu report. The latest deadline is April 1, 2019.

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US reiterates its call for fair, transparent, legal process for Delhi CM Arvind Kejriwal, speaks on Congress frozen accounts

The US spokesperson said that they are also aware of the Congress party’s allegations that tax authorities have frozen some of their bank accounts in a manner that will make it challenging to effectively campaign in the upcoming elections.

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A day after India summoned an US diplomat over their remarks on the arrest of Delhi Chief Minister Arvind Kejriwal in the liquor policy case, the US reiterated its call for fair, transparent, timely legal processes on Wednesday.

Responding to questions on India summoning Gloria Berbena, the US Acting Deputy Chief of Mission in New Delhi, US State Department spokesperson Matthew Miller said that they will continue to follow these actions closely, including the arrest of Delhi Chief Minister Arvind Kejriwal. Notably, the meeting at the foreign ministry’s South Block office lasted nearly 40 minutes yesterday with India objecting strongly to the US remarks on the arrest of Arvind Kejriwal.

Matthew Miller also responded to a question on the Congress party’s frozen bank accounts. The US spokesperson said that they are also aware of the Congress party’s allegations that tax authorities have frozen some of their bank accounts in a manner that will make it challenging to effectively campaign in the upcoming elections. He added that the US encourages fair, transparent and timely legal processes for each of the issues.

Arvind Kejriwal was arrested last week by the Enforcement Directorate (ED) in connection to the Delhi liquor policy scam. Earlier, AAP leaders Manish Sisodia, Satyendar Jain and Sanjay Singh were arrested in the same case.

The External Affairs Ministry had earlier stated that states are expected to be respectful of the sovereignty and internal affairs of others, and this responsibility is even more so in case of fellow democracies, adding that it could otherwise end up setting unhealthy precedents.

The Ministry further emphasized that India’s legal processes are based on an independent judiciary which is committed to objective and timely outcomes. It mentioned that casting aspersions on India’s legal procedure is unwarranted.

The United State’s remarks followed days after Germany’s Foreign Office stressed that Delhi CM Arvind Kejriwal is entitled to a fair and impartial trial. The Indian government labelled their remark as blatant interference in internal matters.

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5 Chinese nationals killed in suicide bomb attack in Pakistan

This is the third major attack on Chinese interests in Pakistan within a week.

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Nearly five Chinese nationals were killed in an explosion during an attack on their convoy by a suicide bomber in northwest Pakistan on Tuesday. Reportedly, the suicide bomber rammed an explosives-laden vehicle into a convoy of Chinese engineers travelling from Islamabad to their camp in Dasu, situated in the Khyber Pakhtunkhwa province.

Regional police chief Mohammad Ali Gandapur said that five Chinese nationals and their Pakistani driver were killed in the attack. As yet, none has claimed responsibility for the attack. Bisham Station House Officer (SHO) Bakht Zahir asserted that the incident was a suicide blast and the authorities concerned were collecting the evidence.

The Station House Officer further added that security arrangements were tightened at the spot and the bodies were being shifted to a hospital. He added that they will investigate from where and how the vehicle of a suicide bomber came and how it happened. Notably, this is the third major attack on Chinese interests in Pakistan within a week.

Previously, two attacks hit an airbase and a strategic port in the southwest province of Balochistan where China is investing billions in infrastructure projects. Several Chinese engineers and Pakistani construction workers have for multiple years been working on hydroelectric projects as part of Beijing’s Belt and Road Initiative in the western province of Khyber-Paktunkhwa.

Notably, Dasu is home to a significant dam project, has been a target of previous attacks. Earlier in 2021, the attack in Dasu resulted in the deaths of nine Chinese nationals, along with two Pakistani children. The incident occured when a bus carrying Chinese engineers and workers to the Dasu Hydropower Project site was targeted.

There was confusion surrounding the nature of the attack initially, with some reports suggesting it was a bus accident. Nonetheless, subsequent investigations revealed that it was indeed a terrorist attack. The bus was hit by a blast, leading it to plunge into a ravine.

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US bridge collapses after being hit by ship

The rescuers were searching for at least 7 people in the water. Some reports said upto 20 construction workers were there on the Baltimore Bridge at the time of the incident. A video of the incident which was widely shared on social media showed the moment the 3 km long bridge collapsed.

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Major portions of the Francis Scott Key Bridge in Baltimore, US collapsed on early Tuesday morning after it was hit by a large container ship. The incident occurred at nearly 1.30 am (US local time). The Baltimore City Fire department said the collapse is a mass casualty incident.

According to reports many vehicles fell into the river below. The rescuers were searching for at least 7 people in the water. Some reports said upto 20 construction workers were there on the Baltimore Bridge at the time of the incident. A video of the incident which was widely shared on social media showed the moment the 3 km long bridge collapsed.

It seems the vessel had hit one of the supports of the Francis Scott Key Bridge, causing the roadway to break apart in many places and plunge into the water. The ship caught fire and appeared to sink. Grace Ocean Pte Ltd, the registered owner of the ship, and the manager, Synergy Marine Group, said it is a Singapore flagged ship Dali which collided with a pillar of the Francis Scott Key Bridge in Baltimore, Maryland.

He said the exact cause of the incident is yet to be determined; the Dali has now mobilized its qualified individual Incident response service. It added that all crew members, including the 2 pilots who were aboard, have been accounted for and there are no reports of injuries.

The local traffic police said all lanes on both directions of the bridge have been closed and the traffic is being de-toured. Maryland Governor Wes Moore also declared a state of emergency after the collapse of the bridge. The bridge was opened in 1977, spans the Patapsco River, a vital artery that along with the Port of Baltimore is a hub for shipping on the East Coast. It is named after the writer of the Star Spangled Banner.  

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