The India - US Relationship and GSP - Seeker's Thoughts

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The India - US Relationship and GSP

President Trump notified the Congress his intent to terminate trade benefits for both India and Turkey under the Generalized System of Preference (GSP) eligibility criteria in March 2019.

What is GSP?

The Generalized System of Preferences (GSP) is a U.S. trade program designed to promote economic growth in the developing world by providing preferential duty-free entry for up to 4,800 products from 129 designated beneficiary countries and territories. GSP was instituted on January 1, 1976, by the Trade Act of 1974.

India and GSP

About 2,000 products, including auto components and textiles, can enter the US duty-free if the beneficiary developing country meet the eligibility criteria.

India was the largest beneficiary of the GSP programme in 2017 with $5.7 billion in imports to the US given duty-free status.

Why the US is planning to withdraw GSP for India?

President Trump has accused India of failing to ensure the US of “equitable and reasonable” access to its markets. The US is pressing India to reduce US trade deficits and has repeatedly called out India for high tariffs.

Withdrawal of GSP is part of the President Trumps plan to redress what it considers to be unfair trading relationships.

India has sought talks with the US to avoid the withdrawal of the trade benefits under the GSP. India has offered a trade package to the US which promises of about Rs 35,000 crore annually in oil and gas imports from the US and another Rs 1,00,000 lakh crore in defence orders in the coming years.

The US and India both nations go through up and downs. There are events when two countries lock horns against one another, and sometimes the deal is done with peace. The bilateral relationship is important for the world’s prosperity and peace. 

India has signed for Sig Sauer of the US
After repeated attempts to equip the infantry soldier with a basic rifle, the Army on February 12 signed a contract with Sig Sauer of the U.S. for 72,400 SIG 716 assault rifles for the frontline soldier deployed in operational areas.

India and United States of America- were not friends initially.
India and US have worked on strong bilateral relationship. Bilateral relationships are mandatory for stability and prosperity of the world.
When India got her independence in 1947, even though Jawaharlal Nehru liked the American Imperialism, he propagated Non-Alignment Principle. That indicated that India was supporting or joining formally neither United States of America nor Soviet Union or Russia.
India followed a socialist model in maintaining economy, and was suspicious about United States. As a result, India leaned towards USSR or Soviet Union or Russia.  
As the ideological Cold War ended after a myriad of international convergences and divergences, India was forced to look West given the paradigm shift in the geopolitics of the world and in Francis Fukuyama’s words “End of History”. Today both India and US are among the most vibrant foreign cohorts and strategic partners.
India-USA: Major Events in History
The birth of Indian Republic was accompanied by Pakistan’s occupation of Kashmir. Nehru’s efforts to garner support from the international community was fruitless.
India Pushed China’s membership in United Nations while America wanted India to join
India declined the American offer to accept a seat at the United Nations Security Council and rather pushed for the membership of the People’s Republic of China which it has immediately recognized as a sovereign nation.
In the year 1950, India abstained from a US-sponsored resolution calling for UN’s military involvement in the Korean War. India even voted against UN forces crossing the 38th Parallel and naming China as an aggressor.
India – Pakistan’s Conflict and The United States
1955: Pakistan officially aligned with the United States via the South East Asian Treaty Organization (SEATO) and Central Treaty Organization (CEATO) also known as Baghdad Pact.
Pakistan became an important ally to the US in the containment of the Soviet Union, giving rise to strategic complications with India.
Meanwhile, India, being the chief proponent of Non-Alignment Movement (NAM), held the first Afro-Asian Conference at Bandung, Indonesia. This clearly indicated that India was not interested in being ally.
India – China War and the friendly gesture of US

In the Sino-Indian war of 1962, the US extended help to India against China’s belligerence by sending an American carrier- The Enterprise- to the Bay of Bengal. China, however, had declared unilateral ceasefire the next day. Indian leaders and public welcomed American intervention.
India criticised US, and grains shipments were restricted for India
1966: During 1966, In response to India’s criticism of the US intervention in Vietnam, President Lyndon B. Johnson restricted the supply of grain shipments to India under Public Law 480 programme.
India rejected a founding membership of ASEAN
1967: A predominantly Anti-American worldview led India to reject a founding membership in the Association of Southeast Asian Nations (ASEAN).
India rejected NPT
1968: India rejected the Non-Proliferation Treaty (NPT) proposed by the world’s leading nuclear powers.
US remained silent on Pakistan’s repressive policies in East Pakistan
In 1971, The USA had maintained a studious silence on Pakistan’s repressive policies in East Pakistan. The then Secretary of State Henry Kissinger visited Delhi to make India comply to not support liberation movements in East Pakistan.
Indira Gandhi’s intransigence was met with diplomatic muscle-flexing. Next month, India signed a Treaty of Friendship, Peace and Cooperation with the Soviet Union, seen as a blatant shift from India’s Non-Alignment policies.
US President Richard Nixon in a retaliatory move chose to explicitly tilt American policy in favour of Pakistan and suspended $87 million worth of economic aid to India. American naval fleet USS Enterprise traversed the Bay of Bengal, issuing mild threats. India won the Bangladesh Liberation War as the Pakistani Army embarrassingly surrendered more than 90,000 troops.
India tested Nuclear Weapon
In, 1974 India conducted its first nuclear weapon test at Pokhran, and it came as a major jolt to the USA who made plans to upgrade its presence at Diego Garcia, a British-controlled island in the Indian ocean.
During 1975 India faced considerable domestic turmoil and entered into a state of Emergency.  The Emergency ended in 1977 and the US immediately eased restrictions it has placed on World Bank loans to India and approved direct economic assistance of $60 million.
Indian and American national personalities visit each other’s Nations.
In 1978 US President Jimmy Carter and Indian Prime Minister Desai exchanged visits to each other’s nations. However, this also did not normalise the relations between India and US.
Huge Military Aid to Pakistan to fight against the Soviet Union in Afghanistan
The 1980s: Large amounts of military aid was pumped into Pakistan by the USA in order to fight a proxy against the Soviet Union in Afghanistan.
This created significant repercussions in the internal security of India as the Pakistani mujahedeen fighters infiltrated into Kashmir as militants.
Rajiv Gandhi visits China
In 1988 Prime Minister Rajiv Gandhi made a historic visit to China which led to normalization of relations between India and China.
India provided logistic support for American Military during Gulf War
1990: India hesitatingly provided a brief logistical support for American military operations in the Gulf War.
The Soviet Union disintegrated into independent nations post 1991 and the United States emerged as the single largest hegemon, making the world unipolar. It coincided with India opening doors to foreign private capital in its historic Liberalization, Privatization, and Globalization move.
Trade between India and the US grew dramatically and is flourishing today.
Why India Matters to the USA?
India’s growing national capabilities give it ever greater tools to pursue its national interests to the benefit of the United States. India has the world’s third-largest Army, fourth-largest Air Force, and fifth largest Navy. All three of these services are modernizing, and the Indian Air Force and Indian Navy have world-class technical resources, and its Army is seeking more of them, which provides for better buyer for US.
India is an important U.S. partner in international efforts to prevent the further spread of weapons of mass destruction.
India’s broad diplomatic ties globally (most importantly in the Middle East), its aspirations for United Nations (UN) Security Council permanent membership, and its role in international organizations such as the International Atomic Energy Agency makes New Delhi an especially effective voice in calls to halt proliferation.
India’s position against radicalism and terrorism corresponds with that of the United States.
India’s English-speaking and Western-oriented elite and middle classes comfortably partner with their counterparts in U.S. firms and institutions, including more than 2.8 million Indian Americans. The U.S. higher education system is an incubator of future collaboration, with more than 100,000 Indian students in American universities.
As India modernizes and grows it will spend trillions of dollars on infrastructure, transportation, energy production and distribution, and defence hardware. U.S. firms can benefit immensely by providing expertise and technology that India will need to carry out this sweeping transformation.
India-USA cooperation is critical to global action against climate change.
India is genuinely committed to a world order based on multilateral institutions and cooperation and the evolution of accepted international norms leading to accepted international law.
Indian culture and diplomacy have generated goodwill in its extended neighbourhood. New Delhi has positive relations with critical states in the Middle East, in Central Asia, in Southeast Asia, and with important middle powers such as Brazil, South Africa, and Japan—all of the strategic value to the United States. India’s soft power is manifest in wide swaths of the world where its civil society has made a growing and positive impression.
Indian democracy has prospered despite endemic poverty; extraordinary ethnic, religious, and linguistic diversity; and foreign and internal conflicts
India is an indispensable partner for the United States. Geographically, it sits between the two most immediate problematic regions for U.S. national interests. The arc of instability that begins in North Africa goes through the Middle East, and proceeds to Pakistan and Afghanistan ends at India’s western border.
The Indian landmass juts into the ocean that bears its name. With the rise of Asian economies, the Indian Ocean is home to critical global lines of communication, with perhaps 50 percent of world container products and up to 70 percent of ship-borne oil and petroleum traffic transiting through its waters.

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