At President Donald Trump’s direction, the United States intends to scrap the preferential trade status granted to India and Turkey, officials said on Monday (Mar 5).
Washington “intends to terminate India’s and Turkey’s designations as beneficiary developing countries under the Generalized System of Preferences (GSP) program because they no longer comply with the statutory eligibility criteria”, the US Trade Representative’s Office said in a statement.
India has failed to provide assurances that it would allow required market access, while Turkey is “sufficiently economically developed” that it no longer qualifies, USTR added.
Turkey and India are among 120 countries that participate in the GSP, the oldest and largest US trade preference program. It aims to promote economic development in beneficiary countries and territories by eliminating duties on thousands of products.
Under the GSP program, “certain products” can enter the US duty-free if countries meet eligibility criteria including “providing the United States with equitable and reasonable market access”.
The preferential trade programme allows US$5.6 billion worth of Indian exports a year to enter the United States duty-free.
India, however, “has implemented a wide array of trade barriers that create serious negative effects on United States commerce”, the statement said.
Trump, who has vowed to reduce US trade deficits, has repeatedly called out India for its high tariffs.
The US goods and services trade deficit with India was US$27.3 billion in 2017, according to the US Trade Representative’s Office.
India is the world’s largest beneficiary of the GSP program and ending its participation would be the strongest punitive action against India since Trump took office in 2017.
“I will continue to assess whether the Government of India is providing equitable and reasonable access to its markets, in accordance with the GSP eligibility criteria,” he said.
Turkey, after being designated a GSP beneficiary in 1975, has meanwhile demonstrated a “higher level of economic development”, meaning that it can be “graduated” from the program, according to USTR.
USTR said in August it was reviewing Turkey’s eligibility in the program after Ankara imposed retaliatory tariffs on US goods in response to American steel and aluminium tariffs.
The United States imported US$1.66 billion in 2017 from Turkey under the GSP program, representing 17.7 per cent of total US imports from Turkey, according to USTR’s website.
The leading GSP import categories were vehicles and vehicle parts, jewellery and precious metals, and stone articles, the website said.