In a sudden announcement after 8pm on Friday May 31, 2019, the President made the anticipated decision that India was to be removed from the Generalized System of Preferences (“GSP”), effective June 5, 2019.  The statement issued by the White House claims that the President had “determined that India has not assured the United States that India will provide equitable and reasonable access to its markets.” The end of GSP eligibility and removal of India’s developing country status comes after holding that status for approximately 30 years and is a deepening indication of the U.S.’s increased protectionist stance in the global trading environment.  Last month the U.S. ended Turkey’s preferential status.

Key Points

• Imports of goods previously eligible for special rates of duty under Column 1-Special of the HTSUS and denoted with the A, A*, or A+ will no longer be able to import goods using this special status effective June 5, 2019
• India will be removed from General Note 4 of the HTSUS effective June 5, 2019
• Entries of goods previously eligible for GSP treatment will now be required to be entered under the duty rates denoted in Column 1-Normal of the HTSUS

The question of India’s GSP status seems oddly timed given that only last year the Senate and the House passed a three-year reauthorization of India’s long-standing GSP status by a near unanimous margin.  This is yet another action by the Trump administration that effectively means that U.S. importers will be required to pay more than $300 million a year in new duties.  India is a significant trading partner of the United States, and its status as a GSP preferential trading partner has saved substantial amounts of money over the years for U.S. importers.  The issue of India’s GSP status has been the subject of much debate and faced opposition from several members of Congress as well as many American businesses.

India had said the move would have a “minimal economic impact”, but it comes at a time lower growth and record unemployment in the country.  Until now, preferential trade treatment for India under the GSP allowed close to $5.6 billion worth of exports to enter the U.S. duty free.