Note4Students
From UPSC perspective, the following things are important :
Prelims level: About Generalised System of Preferences (GSP)
Mains level: Trades and Relations; Changing Geopolitics of the World;
Why in the News?
It is widely believed that renewing the Generalised System of Preferences (GSP) program would pave the way for comprehensive U.S.-India trade negotiations, potentially elevating the bilateral trade relationship to new heights.
What is the ‘Generalised System of Preferences (GSP)’ Program about?
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The Significance of Renewing the GSP:
- US Factor: The GSP program is unique because it requires periodic reauthorization by Congress. This program of the U.S. expired in 2020 and has not yet been renewed, despite bipartisan support.
- For Stability in the Market: Renewal is challenging in a polarized political environment but is crucial for maintaining stable market access for developing countries.
- For Diversification: The GSP supports small businesses and women-owned enterprises, encouraging economic empowerment and diversification away from Chinese imports.
- To bring Reform: It will promote labor and environmental reforms and reduce tariff costs for American businesses, particularly small and medium-sized enterprises.
Significance of US – India Trade Relationship:
- Broader the Trade agreement: The U.S. and India have a significant trade relationship, with bilateral trade worth around $200 billion. Renewing the GSP could facilitate further negotiations and potentially lead to a broader trade agreement.
- Need for GSP renewal: Before the GSP expired, the U.S. and India were close to a trade deal covering various sectors including medical devices, agriculture, ethanol, and IT products.
- Despite ongoing trade dialogues, the U.S. is currently not negotiating new Free Trade Agreements (FTAs), making GSP renewal a key tool for enhancing trade relations.
- A renewed GSP could cover multiple areas such as labour rights, environmental laws, and regulatory practices, fostering a more robust and ambitious trade partnership.
- Strategic Importance:
- In the Indo-Pacific region.
- It can significantly boost trade and economic cooperation between the two countries.
- It would signal a mutual commitment to deepening their trade relationship and addressing broader economic and regulatory issues.
Way forward:
- Utilize GSP as a Negotiation Tool: Leverage GSP renewal as a platform to initiate broader trade negotiations between the U.S. and India, potentially leading to a more comprehensive trade agreement.
- Focus on Strategic Sectors: Identify and prioritize sectors such as technology, pharmaceuticals, and agriculture where both countries have mutual interests and complementary strengths.
Mains PYQ:
Q “What introduces friction into the ties between India and the United States is that Washington is still unable to find for India a position in its global strategy, which would satisfy India’s National self-esteem (UPSC IAS/2019)
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