‘Whole thing is crazy’: US President Donald Trump wants to stop subsidies to India, China
India has been the programme’s top beneficiary, with an estimated $5 billion worth of duty-free exports to the US in 2017.india Updated: Sep 08, 2018 23:38 IST
United States President Donald Trump took aim Friday at trade relations with India, China and other developing nations saying they unfairly received subsidies from the US as “growing economies” and vowed to stop the practice.
“We have some of these countries that are considered growing economies, they are considered nations that are not mature yet so we are paying them subsidies,” Trump told supporters at a rally in Fargo, North Carolina. “The whole thing is crazy”.
“You know, like India, like China, like others, we say ‘oh they are growing’ so I say I want to put us in that category, too we are growing… they call themselves developing nations… we are a developing nation too.”
And under that category as developing nations “they get subsidies, we pay them money... but we are going to stop it. We have stopped it.”
The president did not explain the reference to subsidies, but he might have been alluding to the Generalized System of Preferences (GSP), a trade programme under which the US eliminates duty on thousands of products it imports from 120 beneficiary countries that are considered poor and developing.
India has been the programme’s top beneficiary, with an estimated $5 billion worth of duty-free exports to the US in 2017. And the US has initiated a review of India’s eligibility to continue as a beneficiary, along with some other countries such as Indonesia and Kazakhstan.
For India, the review is based on concerns related to its compliance with the GSP market access criterion, the office of the US trade representative, the body that monitors US trade relations, has said. It has cited complaints from US dairy and medical devices industries that India has erected tariff barriers against their goods.
India has challenged that contention in principle, but negotiations are underway between trade teams of the two countries to address those and other trade issues created by President Trump’s tariffs on steel and aluminium imports. India has threatened retaliatory measures and gone to the World Trade Organisation.
The world trade body has also been in the crosshairs of the American president.
Trump has called the agreement establishing the WTO the “the single worst trade deal ever made” and has threatened to pull out of it.
The president reprised his problem with the WTO at the rally again on Friday, calling it “probably the worst” of all deals. “But a lot of people don’t know what that is, that allowed China to become this great economic power”. He has also said before that the world body has been historically unfair to the US, settling disputes mostly against it.
With that, he segued to China and his problem with the large trade surplus it has over the US, which he is trying to fix with tariffs, leading to retaliatory levies from China, which is not a beneficiary of the GSP.
Trump has now threatened to expand tariffs to cover almost all imports from China. Negotiations are underway at the same time, but that’s been the president’s carrot-and-stick approach towards trade deals.
“The US is moving towards protectionist policies wherever possible. These arguments are part of that. But there is always scope for negotiations in trade. But one particular statement should not be taken seriously unless it is repeated in other forums. Basically, we need to wait and watch,” said economist Manoj Panda, director of Delhi University’s Institute of Economic Growth.
First Published: Sep 08, 2018 23:38 IST