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President Donald Trump’s administration said in March it was removing India from the Generalized System of Preferences, which gives favorable access to goods from developing countries.
India, which had been the top beneficiary of the deal under which it exported $5.6 billion to the United States in 2017, protested that it could make no counter-proposals due to laws that forbid policy-making during the election season.
A senior US official voiced hope for warm relations with PM Modi but said that the March decision would move forward.
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“We believe there is enormous potential to grow our trade relationship and to help stimulate the jobs that Prime Minister Modi has committed to bringing to an overwhelmingly young Indian population,” she said.
The official said that India “remains one of the least open major economies in the world,” adding: “The Trump administration is committed to ensuring free, fair and reciprocal trade.”
The Trump administration said it was removing India from the GSP due to trade barriers and also terminating the status for Turkey on the grounds that it was no longer a developing country.
Trump has taken a tough line on trade even with US allies and has been especially incensed at Indian tariffs on high-end manufactured goods such as motorcycles.
In another major sticking point in negotiations that led to the decision, the United States had pressed India to loosen regulations on the import of US dairy products.
India had objected on cultural grounds as US cows are often fed blood meal from other cattle. As most Hindus do not eat beef, India unsuccessfully asked the US dairy industry to certify how the cows are fed.
The official nonetheless said that the United States hoped to boost relations with PM Modi, including on defense cooperation.
PM Modi is scheduled to meet President Trump in late June on the sidelines of a Group of 20 summit in Osaka.