Generalised System of Preferences (GSP)
Context:
- India and the US are set to discuss number of important trade issues at the trade policy forum meet that begins today (January 12).
- These issues include from New Delhi’s long-pending demand seeking the restoration of Generalised System of Preferences (GSP).
Background:
- India had lost GSP benefits in 2019 when former US President Trump began introducing radical trade measures after citing widening trade gap with India and China.
- Trump’s trade war was detrimental to New Delhi as it was the largest beneficiary of GSP status in 2017 with nearly $5.7 billion worth of imports into the US given duty-free status.
What is the totalisation agreement that India is seeking?
- India is also set to discuss its longstanding demand for a totalisation agreement that will provide social security to Indian professionals in the US.
- A totalisation agreement or social security agreement will eliminate dual social security deductions in India and also in the US.
- The agreement will particularly benefit the Indian IT sector workforce who are working in the US and paying social security but are unfortunately unable to get the benefit.
About GSP:
- The Generalized System of Preferences (GSP) scheme is a voluntary trade measure which is implemented by developed countries that provide an advantageous, or “preferential”, tariff treatment to imports from developing countries.
- Different national GSP schemes were introduced after a resolution adopted at the second session of the United Nations Conference on Trade and Development (UNCTAD) in 1968.
- The scheme is expected to contribute to developing countries’ export growth especially in the manufacturing sector.