India US Trade Relations And Terrorism Designations 2019

The United States, in 2019, decided to withdraw Generalized System of Preferences (GSP) benefits on 94 products from all countries, impacting India's exports to the US. The GSP is a preferential tariff system designed to aid developing nations through reduced or zero tariffs. Concurrently, India welcomed the US State Department's decision to designate three Pakistan-based Lashkar-e-Toiba (LeT) terrorists and financiers as Specially Designated Global Terrorists (SDGTs). This designation allows the US to block the terrorists' assets and restrict their access to the US financial system. This action occurred against the backdrop of China blocking a proposal at the UN to designate Masood Azhar under the 1267 Al Qaeda Sanctions Committee for the fourth time, a designation that would subject terrorists to an assets freeze, travel ban, and arms embargo.

India-US Relations in 2019: Trade Tensions and Counter-Terrorism Cooperation

The year 2019 presented a complex tapestry of developments in India-US relations, marked by both cooperation on counter-terrorism and friction on trade. The United States’ decision to withdraw Generalized System of Preferences (GSP) benefits from India, alongside its designation of Lashkar-e-Toiba (LeT) operatives as Specially Designated Global Terrorists (SDGTs), underscored the multifaceted nature of the bilateral relationship. These events unfolded against the backdrop of China's continued obstruction of efforts to designate Masood Azhar, the head of Jaish-e-Mohammed, as a global terrorist at the United Nations. Understanding these developments requires a deep dive into the historical context, the key actors involved, and the broader implications for regional security and international trade.

The Generalized System of Preferences: A History of Preferential Treatment

The Generalized System of Preferences (GSP) is a trade program designed to promote economic development in developing countries by providing preferential tariff treatment, such as reduced or zero tariffs, on eligible products exported to developed countries. The idea behind GSP is rooted in the concept of non-reciprocal trade preferences, where developed nations offer concessions to developing nations without requiring equivalent concessions in return. This approach aims to level the playing field and provide developing countries with a competitive advantage in global markets, fostering economic growth and reducing poverty.

The GSP originated in the United Nations Conference on Trade and Development (UNCTAD) in the 1960s. UNCTAD's mandate is to promote trade, investment, and development in developing countries. Recognizing the need for special and differential treatment for developing countries, UNCTAD advocated for the establishment of a generalized system of preferences that would be universally applied by developed countries. The initial discussions and negotiations within UNCTAD laid the groundwork for the implementation of GSP schemes by various developed countries in the following years.

The United States implemented its GSP program in 1974 under the Trade Act of 1974. The program aimed to promote economic growth in developing countries by providing duty-free access to the US market for thousands of products. Over the years, the US GSP program has undergone several renewals and revisions, with changes to the eligibility criteria, product coverage, and beneficiary countries. The program is typically reauthorized by the US Congress every few years, providing an opportunity to update and refine its provisions.

The GSP program has been a significant tool for promoting trade between developed and developing countries. It has helped developing countries diversify their exports, increase their market share in developed countries, and attract foreign investment. The program has also contributed to job creation and poverty reduction in developing countries. However, the GSP program is not without its limitations. The eligibility criteria can be stringent, and the product coverage may not always align with the export interests of developing countries. Additionally, the program is subject to periodic reviews and renewals, which can create uncertainty for businesses and investors.

The US Withdrawal of GSP Benefits: Impact on India

The US decision to withdraw GSP benefits from India in 2019 was based on the determination that India no longer met the eligibility criteria for the program. The US government cited concerns about India's market access barriers, particularly in sectors such as agriculture, dairy, and medical devices. The US also raised concerns about India's intellectual property protection regime and its compliance with international trade rules.

The withdrawal of GSP benefits affected approximately $5.6 billion worth of Indian exports to the US. Key sectors that were impacted included chemicals, engineering goods, textiles, and agricultural products. The removal of duty-free access to the US market made Indian products less competitive compared to goods from other countries that still enjoyed GSP benefits or had free trade agreements with the US.

The Indian government expressed disappointment with the US decision and argued that India had taken steps to address the concerns raised by the US. India also emphasized the significant trade and investment ties between the two countries and the potential for further growth in the bilateral relationship. The withdrawal of GSP benefits led to trade negotiations between India and the US, with both sides seeking to resolve outstanding issues and restore preferential trade treatment.

The withdrawal of GSP benefits had several implications for India's economy. It increased the cost of Indian exports to the US, making them less competitive. This could lead to a decline in exports and a loss of market share. The withdrawal of GSP benefits also created uncertainty for Indian businesses that relied on duty-free access to the US market. Some businesses may have had to adjust their production plans, find new markets, or reduce their workforce.

The GSP withdrawal also had broader implications for India-US trade relations. It signaled a shift in the US approach to trade with India, with a greater emphasis on reciprocity and market access. The US also used the GSP withdrawal as leverage to push India to address other trade-related concerns, such as intellectual property protection and investment barriers.

Most Favored Nation (MFN) Status: The Cornerstone of Non-Discriminatory Trade

The Most Favored Nation (MFN) principle is a cornerstone of international trade law, enshrined in the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO) agreements. The MFN principle requires that a country extend the same trade concessions and treatment to all its trading partners. This means that if a country grants a particular trade advantage to one country, it must grant the same advantage to all other countries that are members of the WTO.

The MFN principle aims to promote non-discrimination and equal treatment in international trade. It ensures that countries do not discriminate against each other by imposing different tariffs or other trade barriers. The MFN principle fosters competition and efficiency in global markets by creating a level playing field for all trading partners.

However, the MFN principle is not absolute. There are exceptions to the MFN principle, such as regional trade agreements and preferential trade arrangements for developing countries. Regional trade agreements, such as free trade areas and customs unions, allow countries to grant preferential treatment to each other without extending the same treatment to all other countries. Preferential trade arrangements for developing countries, such as the GSP, allow developed countries to grant preferential tariff treatment to developing countries without requiring equivalent concessions in return.

The MFN principle is closely related to the principle of national treatment, which requires that a country treat foreign goods and services no less favorably than its own domestic goods and services. The national treatment principle ensures that foreign goods and services are not subject to discriminatory taxes, regulations, or other measures. Together, the MFN and national treatment principles form the foundation of the WTO's non-discrimination rules.

The Designation of LeT Terrorists as SDGTs: A Counter-Terrorism Measure

The US State Department's decision to designate three Pakistan-based Lashkar-e-Toiba (LeT) terrorists and financiers as Specially Designated Global Terrorists (SDGTs) was a significant counter-terrorism measure aimed at disrupting the financial networks and operations of the terrorist group. The SDGT designation is a tool used by the US government to target individuals and entities that are determined to be involved in terrorist activities.

Lashkar-e-Toiba (LeT) is a Pakistan-based terrorist group that has been responsible for numerous attacks in India, including the 2008 Mumbai attacks. The group is known for its close ties to the Pakistani intelligence agency, the Inter-Services Intelligence (ISI), and has been accused of receiving support and training from the Pakistani government. LeT operates primarily in the disputed territory of Jammu and Kashmir, seeking to undermine Indian control and promote its own agenda.

The SDGT designation allows the US government to freeze the assets of the designated individuals and entities, prohibit US citizens and companies from engaging in transactions with them, and restrict their access to the US financial system. The designation also puts pressure on other countries to take similar actions against the designated individuals and entities.

The US designation of LeT terrorists as SDGTs was welcomed by India, which has long sought to hold Pakistan accountable for its support of terrorism. India has repeatedly called on Pakistan to take credible and verifiable action against terrorist groups operating on its soil and to dismantle their infrastructure. The US designation of LeT terrorists was seen as a sign of support for India's efforts to combat terrorism and to hold Pakistan accountable.

The designation of LeT terrorists as SDGTs also had implications for Pakistan. It increased the pressure on Pakistan to take action against LeT and other terrorist groups operating on its soil. The US has repeatedly warned Pakistan that it must do more to combat terrorism and that it could face sanctions if it fails to do so. The SDGT designation was a clear signal that the US was serious about holding Pakistan accountable for its counter-terrorism efforts.

US Executive Order 13224: Blocking Terrorist Financing

US Executive Order 13224, issued in 2001 in the aftermath of the September 11th attacks, is a powerful tool used by the US government to combat terrorism financing. The executive order authorizes the US government to designate individuals and entities as Specially Designated Global Terrorists (SDGTs) and to freeze their assets.

Executive Order 13224 targets not only terrorists themselves but also those who provide support to terrorists, including financiers, facilitators, and front organizations. The executive order allows the US government to impose sanctions on individuals and entities that are determined to be involved in terrorist activities, regardless of their location or nationality.

The SDGT designation under Executive Order 13224 has significant consequences for the designated individuals and entities. Their assets are frozen, and US citizens and companies are prohibited from engaging in transactions with them. The designation also makes it more difficult for the designated individuals and entities to travel, open bank accounts, or conduct business.

Executive Order 13224 has been used to designate hundreds of individuals and entities as SDGTs, including members of al-Qaeda, ISIS, Hezbollah, Hamas, and other terrorist groups. The executive order has been an effective tool for disrupting the financial networks and operations of these groups.

The designation of LeT terrorists and financiers as SDGTs under Executive Order 13224 was a significant step in the fight against terrorism. It demonstrated the US commitment to combating terrorism and to holding accountable those who support it. The designation also sent a strong message to Pakistan that it must do more to combat terrorism and to dismantle terrorist infrastructure on its soil.

The United Nations Security Council (UNSC) and Counter-Terrorism Efforts

The United Nations Security Council (UNSC) plays a crucial role in maintaining international peace and security, including combating terrorism. The UNSC has adopted numerous resolutions aimed at preventing and suppressing terrorism, including Resolution 1373 (2001), which requires all member states to take steps to prevent and suppress the financing of terrorism, criminalize terrorist activities, and deny safe haven to terrorists.

The UNSC also maintains a sanctions regime targeting individuals and entities associated with al-Qaeda and the Taliban under Resolution 1267. The 1267 sanctions regime imposes asset freezes, travel bans, and arms embargoes on designated individuals and entities. The UNSC also maintains a list of individuals and entities subject to these sanctions.

The UNSC's counter-terrorism efforts are coordinated by the Counter-Terrorism Committee (CTC), which monitors the implementation of UNSC resolutions related to terrorism. The CTC also provides technical assistance to member states to help them implement these resolutions.

The UNSC's counter-terrorism efforts have been instrumental in preventing and suppressing terrorism around the world. The UNSC's sanctions regimes have helped to disrupt the financial networks and operations of terrorist groups, and its resolutions have provided a framework for international cooperation in combating terrorism.

UNSCR 1267 and the Designation of Terrorists

UNSCR 1267 is a United Nations Security Council Resolution that established a sanctions regime to target individuals and entities associated with Al-Qaeda and the Taliban. The resolution was initially adopted in 1999 in response to the growing threat posed by Al-Qaeda and the Taliban in Afghanistan. Over the years, the resolution has been amended and updated to reflect the evolving nature of the terrorist threat.

The 1267 sanctions regime imposes a range of measures on designated individuals and entities, including asset freezes, travel bans, and arms embargoes. The asset freeze requires member states to freeze the funds and other financial assets of designated individuals and entities. The travel ban prohibits member states from allowing designated individuals to enter or transit through their territories. The arms embargo prohibits member states from supplying, selling, or transferring arms and related materiel to designated individuals and entities.

The 1267 sanctions regime is implemented by a committee of the Security Council, known as the 1267 Committee. The 1267 Committee is responsible for maintaining the list of individuals and entities subject to the sanctions and for monitoring the implementation of the sanctions by member states. The 1267 Committee also considers requests for exemptions from the sanctions, such as for humanitarian purposes.

The 1267 sanctions regime has been an important tool in the fight against terrorism. It has helped to disrupt the financial networks and operations of Al-Qaeda and the Taliban and to prevent them from carrying out terrorist attacks. However, the sanctions regime has also faced criticism for its lack of transparency and due process.

China's Role in Blocking Terrorist Designations at the UN

China's repeated blocking of efforts to designate Masood Azhar, the head of Jaish-e-Mohammed, as a global terrorist at the United Nations under UNSCR 1267 highlighted the complexities of international counter-terrorism efforts and the challenges in achieving consensus on terrorism-related sanctions. Jaish-e-Mohammed (JeM) is a Pakistan-based terrorist group that has been responsible for numerous attacks in India, including the 2001 Indian Parliament attack and the 2019 Pulwama attack.

India has repeatedly sought to have Masood Azhar designated as a global terrorist under UNSCR 1267, arguing that he poses a significant threat to international peace and security. However, China has consistently blocked these efforts, citing a lack of sufficient evidence.

China's opposition to the designation of Masood Azhar has been a source of friction between India and China. India has accused China of protecting Pakistan-based terrorists and of undermining international counter-terrorism efforts. China has defended its position, arguing that it is based on objective and impartial assessments of the evidence.

China's blocking of the designation of Masood Azhar has raised questions about its commitment to combating terrorism. Some analysts argue that China's actions are motivated by its close ties to Pakistan and its desire to protect its strategic interests in the region. Others argue that China is concerned about the potential for the sanctions regime to be misused for political purposes.

The World Trade Organization (WTO) and International Trade Regulation

The World Trade Organization (WTO) is an international organization that regulates international trade. The WTO was established in 1995 as the successor to the General Agreement on Tariffs and Trade (GATT), which had been in place since 1948. The WTO provides a framework for trade negotiations, dispute resolution, and the enforcement of trade agreements.

The WTO's main functions include:

• Administering WTO trade agreements
• Serving as a forum for trade negotiations
• Handling trade disputes
• Monitoring national trade policies
• Providing technical assistance and training for developing countries
• Cooperating with other international organizations

The WTO's membership includes over 160 countries, accounting for the vast majority of world trade. The WTO operates on the basis of consensus, meaning that decisions are typically made by agreement among all member countries.

The WTO's agreements cover a wide range of trade-related issues, including:

• Trade in goods
• Trade in services
• Intellectual property rights
• Agriculture
• Sanitary and phytosanitary measures
• Technical barriers to trade

The WTO's dispute settlement system is one of its most important functions. The dispute settlement system provides a mechanism for resolving trade disputes between member countries. If a country believes that another country has violated a WTO agreement, it can bring a case to the WTO for adjudication. The WTO's dispute settlement system is binding, meaning that countries are obligated to comply with the rulings of the WTO's dispute settlement body.

The WTO has been instrumental in promoting trade liberalization and economic growth around the world. The WTO's agreements have reduced tariffs and other trade barriers, making it easier for countries to trade with each other. The WTO's dispute settlement system has helped to resolve trade disputes and to ensure that countries comply with their trade obligations.

UNCTAD's Role in Promoting Trade and Development

UNCTAD, the United Nations Conference on Trade and Development, plays a vital role in promoting trade and development, particularly for developing countries. Established in 1964, UNCTAD serves as a forum for intergovernmental discussions, policy analysis, and technical assistance related to trade, investment, and development issues.

UNCTAD's main objectives include:

• Promoting trade as an engine for growth and development
• Helping developing countries integrate into the global economy
• Providing technical assistance to developing countries to enhance their trade capacity
• Analyzing global economic trends and their impact on developing countries
• Advocating for policies that promote sustainable development

UNCTAD's work covers a wide range of issues, including:

• International trade
• Investment
• Technology
• Commodities
• Debt management
• Competition policy
• Trade facilitation
• Sustainable development

UNCTAD provides research, policy analysis, and technical assistance to developing countries to help them address these issues. UNCTAD also organizes conferences, workshops, and training programs to build the capacity of developing countries in trade and development.

UNCTAD works closely with other international organizations, such as the WTO, the World Bank, and the International Monetary Fund (IMF), to promote trade and development. UNCTAD also collaborates with civil society organizations, the private sector, and academia to advance its goals.

UNCTAD has been instrumental in promoting the interests of developing countries in the global economy. UNCTAD has helped to raise awareness of the challenges faced by developing countries and to advocate for policies that promote their development. UNCTAD has also provided valuable technical assistance to developing countries to help them enhance their trade capacity and integrate into the global economy.

Historical Precedents: GSP Withdrawals and Terrorist Designations

The US withdrawal of GSP benefits from India and the designation of LeT terrorists as SDGTs were not isolated events. They were part of a broader pattern of US trade and counter-terrorism policies.

The US has a history of using GSP withdrawals as a tool to pressure countries to address its trade concerns. In the past, the US has withdrawn GSP benefits from countries that have failed to protect intellectual property rights, provide market access for US goods and services, or comply with international labor standards. These withdrawals have often led to trade negotiations and adjustments in trade policies.

Similarly, the US has a long history of designating terrorist groups and individuals as SDGTs. The US has used this tool to target terrorist groups and individuals from around the world, including al-Qaeda, ISIS, Hezbollah, Hamas, and other groups. The SDGT designation allows the US to freeze the assets of the designated individuals and entities, prohibit US citizens and companies from engaging in transactions with them, and restrict their access to the US financial system.

These historical precedents demonstrate that the US withdrawal of GSP benefits from India and the designation of LeT terrorists as SDGTs were not unusual actions. They were consistent with the US's broader trade and counter-terrorism policies.

Stakeholder Positions: India, US, Pakistan, and China

The events surrounding the US withdrawal of GSP benefits from India and the designation of LeT terrorists as SDGTs involved a number of key stakeholders, each with their own interests and positions.

India expressed concern over the GSP withdrawal, arguing that it would harm Indian exports and create uncertainty for Indian businesses. India also welcomed the designation of LeT terrorists as SDGTs, seeing it as a sign of support for its efforts to combat terrorism. India has long sought to hold Pakistan accountable for its support of terrorism and has repeatedly called on Pakistan to take credible and verifiable action against terrorist groups operating on its soil.

The United States cited concerns about market access and trade deficits as reasons for the GSP withdrawal. The US also expressed its commitment to combating terrorism and to holding accountable those who support it. The US has repeatedly warned Pakistan that it must do more to combat terrorism and that it could face sanctions if it fails to do so.

Pakistan likely condemned the designation of LeT terrorists and may have expressed concern over the impact of GSP withdrawal on its economy. Pakistan has long denied supporting terrorism and has argued that it is a victim of terrorism itself. Pakistan has also sought to maintain its relations with the US and to avoid international pressure to act against terrorism.

China maintained its position on the designation of Azhar under UNSCR 1267, blocking the designation at the UN. China has close ties to Pakistan and has often defended Pakistan's interests on the international stage. China has also been reluctant to support sanctions against terrorist groups that it believes could destabilize the region.

Broader Implications: Political, Diplomatic, Legal, Security, and Economic

The events surrounding the US withdrawal of GSP benefits from India and the designation of LeT terrorists as SDGTs had a number of broader implications.

Politically, the GSP withdrawal strained India-US trade relations and raised questions about the future of the bilateral relationship. The designation of LeT terrorists increased pressure on Pakistan to address terrorism concerns.

Diplomatically, the events impacted regional dynamics and international counter-terrorism efforts. China's blocking of the designation of Azhar at the UN undermined international efforts to combat terrorism and raised questions about China's commitment to multilateralism.

Legally, the events had implications for international sanctions regimes and the application of US laws to foreign entities. The SDGT designation demonstrated the US's willingness to use its laws to target individuals and entities involved in terrorism, regardless of their location or nationality.

In security terms, the events enhanced focus on counter-terrorism cooperation between India and the US. The two countries have a long history of cooperation in counter-terrorism and have worked together to share intelligence, conduct joint training exercises, and disrupt terrorist networks.

Economically, the GSP withdrawal had a potential impact on Indian exports to the US and led to adjustments in trade policies. The withdrawal increased the cost of Indian exports to the US, making them less competitive. This could lead to a decline in exports and a loss of market share.

Connections and Context: Related Issues and Future Outlook

The events surrounding the US withdrawal of GSP benefits from India and the designation of LeT terrorists as SDGTs were connected to a number of related ongoing issues, including:

• India-US trade negotiations
• Cross-border terrorism in South Asia
• China's role in international organizations
• US sanctions policy

These events also had historical connections to:

• Past trade disputes between India and the US
• Previous instances of US sanctions against terrorist groups
• China's historical support for Pakistan

Looking ahead, the future outlook for India-US relations and counter-terrorism efforts in South Asia remains uncertain. Continued trade negotiations between India and the US are expected, with both sides seeking to resolve outstanding issues and to strengthen their economic ties. Ongoing efforts to combat terrorism in South Asia are also expected, with the US and India continuing to work together to disrupt terrorist networks and to hold accountable those who support them. Potential for further designations of terrorists and entities by the US and other countries exists, as the international community continues to grapple with the threat of terrorism.