US Moves To Scrap Preferential Trade Status Of India, Turkey

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The US government has said it will scrap the preferential trade status of India and Turkey, the country’s trade chief officer, Robert Lightizer has said. 

Trump has made an overhaul of global trade and the slashing of American trade deficits a central plank of his presidency.

The Generalized System of Preferences (GSP) program had granted favourable treatment of imports from both countries for a range of manufactured goods, such as automotive parts, tires and appliance parts.

But Trump’s administration will end “India’s and Turkey’s designations as beneficiary developing countries” because both countries no longer qualified, Lighthizer said in a statement.

India, the biggest beneficiary of the GSP program, had failed to assure Washington that it would allow required market access and instead erected “trade barriers that create serious negative effects on United States commerce,” the statement added.

New Delhi played down the effect of the decision, with Commerce Secretary Anup Wadhawan saying the withdrawal of the program would not have a “significant impact” on Indian trade.

Of India’s $80 billion in annual exports to the US, only $5.6 billion were covered by the scheme, he added in comments reported by the Press Trust of India news agency.

New Delhi’s commerce ministry said that India’s tariffs were in line with its commitments to the World Trade Organization, while imports of US oil and natural gas had narrowed Washington’s trade deficit with India in recent years.

The changes cannot take effect for at least 60 days following the notification of Congress as well as the countries affected — a process Trump began Monday with letters to the speaker of the House of Representatives and the president of the Senate.

The change for India came after “intensive engagement” between New Delhi and Washington, Trump wrote in one letter, the text of which was released by the White House.

“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,” the president wrote.

Turkey has meanwhile demonstrated a “higher level of economic development,” meaning that it can be “graduated” from the program, according to the US trade chief’s office.

In his letter on Turkey, Trump said the country’s economy “has grown and diversified,” and noted that Istanbul has already “graduated from other developed countries’ GSP programs.”

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