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Renew the Generalised System of Preferences
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Context
In the United States, the renewal of the Generalised System of Preferences (GSP), to provide economic incentives for developing nations through tariff reductions, is currently stalled, prompting concerns over its implications for global trade and bilateral relations.
Renewing GSP:
- Legislative Hurdles in GSP Renewal: The U.S. GSP program, subject to periodic expiration and renewal by Congress, remains in limbo since its expiration in 2020, despite bipartisan support.
- Importance of GSP for Developing Countries: GSP plays a crucial role in facilitating market access for developing nations, particularly benefiting small businesses and women-owned enterprises, while also promoting economic reforms and sustainability.
- Diverse Support Coalitions: Bipartisan support for GSP renewal is evident, with various stakeholders emphasizing its significance in diversifying supply chains, reducing tariffs, and fostering trade relations, including talks with India.
U.S.-India Trade Relationship:
- Potential of GSP Renewal in U.S.-India Trade Talks: Renewal of GSP could pave the way for broader trade negotiations between the U.S. and India, potentially elevating bilateral trade beyond the current $200 billion mark.
- Previous Negotiations and Potential Trade Scope: Prior negotiations between U.S. and Indian trade representatives hinted at a wide-ranging agreement covering various sectors like medical devices, agriculture, and information technology.
- Limitations in Trade Tools: Despite India's efforts in negotiating FTAs with multiple partners, the U.S. stance on FTAs limits the scope for comprehensive trade agreements, making GSP renewal a crucial avenue for trade enhancement.
Role of GSP in U.S.-India Trade Relations:
- Benefits of GSP Negotiations: GSP renewal offers a strategic opportunity for trade negotiations, addressing areas such as goods, services, labour rights, environmental laws, and regulatory practices, thus bolstering trade ties.
- Alignment with Indo-Pacific Collaboration: Amidst growing strategic collaboration in the Indo-Pacific, leveraging GSP for trade enhancement underscores mutual aspirations for deeper trade relations between the U.S. and India.
- Path Forward for Comprehensive Trade Engagement: While GSP alone may not suffice, its renewal signals a strong commitment towards advancing bilateral trade relations, aligning with broader strategic interests and economic objectives.
Mains Question:
Discuss the significance of the Generalised System of Preferences (GSP) and its role in fostering economic reforms and trade relations between developed and developing countries.
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