The suspension of a U.S. trade preference programme with India is a "done deal," a senior State Department official said on Thursday as Prime Minister Narendra Modi began his second term.
President Donald Trump announced in March he would end India's access to the decades-old Generalized System of Preferences (GSP) trade programme over what the U.S. said was lack of access to India's market. The programme allows emerging countries to export goods to the United States without paying duties.
U.S. law requires the administration to wait 60 days after it notifies Congress of the move before it formally ends India's participation in the programme. Trump notified Congress of the move in early March.
"There is every reason to believe that GSP suspension will move forward," the official told reporters, speaking on condition of anonymity. "What is important is that the interest is to resolve trade irritants - to ensure fair and equitable market access," the official added.
But the official said the benefits could be restored if India gave U.S. companies fair and equitable access to its markets.
"We need to be looking forward at how we relaunch an ambitious set of discussions between our trade teams in order to address these outstanding irritants," the official said.
"We believe if India is prepared to address policies, including data localization, e-commerce measures that served to stifle international investment for top-tier companies, that we can continue to make significant progress moving forward," the official added.
India is the world's largest beneficiary of GSP, which dates from the 1970s, and ending its participation would not only be the strongest punitive action against the country since Trump took office, but would also open a new front in the global trade war.
Twenty-four U.S. members of Congress sent the administration a letter on May 3 urging it not to terminate India's access to the GSP.
