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In response to the collapse of World Trade Organization (WTO), US Trade Representative Susan Schwab hinted that her country may end a 32-year old program of trade benefits for 13 nations, including India, as retribution for hard-nosed negotiations. The Generalized System of Preferences (GSP) program grants duty-free treatment for goods imported from 133 developing nations. Other than India, Schwab said that other one the review list may include Indonesia, the Philippines, Argentina, Brazil, Croatia, Kazakhstan, Romania, Russia, South Africa, Turkey, Thailand, and Venezuela.
Election-year politicking in the US has seen many policy makers faulting developing countries like India and Brazil for the collapse of negotiations and a strong complaint has reached the Trade Office sparking the review. They accuse developing nations of intransigence while absolving themselves of the same fault. An end to the GSP will affect developing nations because of the inherent benefits of this program including waiver of import duties which increases competitiveness of the products from developing nations. Last year, the US imported thousands of products valued at USD 26.7 billion under this program. The GSP program itself will expire on December 31.
Senate Finance Committee (SFC) Chairman Charles Grassley queried why the US should “continue to give” “Countries that don’t want to give us access to their markers in the WTO negotiations.” The SFC has control over the nature, scope, and strength of the GSP. In response to the complaint, the Bush administration will take a closer look at nations that had exported more than USD 100 million and evaluate options to “limit, suspend, or withdraw” the eligibility of the 13 countries. However, senior Congressional Representatives have opposed the review especially for strategically important so-called advanced developing countries like India and Brazil. Schwab said she prefers the extension of the program for many developing even at reduced benefits levels.
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Schwab argues that “Congress has given the GSP program broad bipartisan support” for over 30 years which the US believes “serves as an important bridge for developing countries to facilitate their transition from unilateral preferences to full economic partnership.” Since “Both the US and participating countries benefit from expanded trade under GSP,” Schwab the Congress to “re-authorized when it expires at the end of the year.” Addressing a Congressional concern that only a few countries benefit from the GSP program, she said promised to “ensure” that the program will operate “as congress intended.” It is not clear what she meant leaving room for speculation that the US may limit benefits to some countries and introduce policy to specifically target those which opposed the US in WTO negotiations
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