US, India 'Not Far Away' From Deal to Restore GSP Benefits, Lighthizer Says
A small deal that would restore India's Generalized System of Preferences benefits is something that U.S. Trade Representative Robert Lighthizer and Commerce Minister Piyush Goyal have made headway on, Lighthizer said while speaking to the Confederation of Indian Industry. “My guess is we are not far away from a deal like that. Keep in mind, obviously, we have a political change going on over here and that’s going to be a bit of a setback, certainly, to the extent that I can facilitate that, which I would be happy to do it, but there is going to be some changes and my guess is that is going to slow things up,” he said Dec. 16 during an online interview.
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The entire GSP program looks like it's going to expire at the end of the year (see 2012150056), but is likely to be renewed at some point in 2021. If India were to return to the program, it would be significant, since it was the largest exporter taking advantage of the trade preferences. “We had talked about doing a smallish GSP deal but both of us think what’s ultimately needed is a big deal,” Lighthizer said. “We need a large, free trade-like agreement with India.”
But, he said, India's “extremely high tariffs” are a barrier, and that while its effective tariffs aren't as high as the average 50% bound rate, they are still five times U.S. tariff levels.
Agriculture exporters tend to be at the forefront of U.S. free trade stakeholders, and agriculture is particularly sensitive in India, Lighthizer acknowledged. Lighthizer said India's very high tariffs are even higher than other developing countries' are, and it would “have to reduce tariffs on an awful lot of things” in order to have closer trade relationships. “Reducing tariffs on an MFN [most favored nation] basis may be something that India is not interested in but if they had a deal with the United States, we could reduce tariffs in ways that would be a benefit I think to both of us,” he said. “If we’re going to have a closer relationship economically, that means trade, and that means buying as well as selling.”
Lighthizer said that he guesses a broader deal isn't going to happen anytime soon, but working toward it is worth it. Ultimately, it makes sense, and the large Indian-American population makes “it likely we can get something done,” he said.
The moderator asked him if India can be a manufacturing alternative to China and Vietnam, and Lighthizer said the country has some advantages and disadvantages. “If you had a big agreement [with us], I think you would see a shift that’s substantial,” he said.