Mercantalist Concerns in US GSP Law: Termination of GSP Benefits to India

Abstract

As has been the case with many developed countries, the United States unilaterally grants trade preferences to developing countries under its Generalized System of Preferences (GSP) Programme. The US GSP Programme is granted on the basis of a few conditions, some of which are compulsory, while others are discretionary on part of the President of the US. In June 2018, the United States Trade Representative (USTR) conducted a review of India’s eligibility as a Beneficiary Developing Country on the grounds that India does not provide the US ‘equitable and reasonable access to its markets’. This is one of the discretionary conditions under the GSP Programme. On 31 May 2019, the US President, via Proclamation 9902, modified the list of Beneficiary Developing Countries withdrawing the GSP benefits that were granted to India, citing India’s failure to fulfil the said market access condition. In light of this, the article analyses the legality of grant and withdrawal of GSP benefits on this market access condition with respect to the World Trade Organization (WTO) law. The article begins with exploring the historical development of the Generalized System of Preferences from the GATT-era to the present WTO regime. It then examines the validity of the US GSP Programme in light of the relevant WTO framework, in particular, the 1979 Enabling Clause. It also analyses the US GSP Programme in light of the WTO Appellate Body Report in the EC – Tariff Preferences case. The article concludes by suggesting the possible arguments that India could make in a potential dispute and the larger political ramifications of challenging the US GSP Programme.