US to deprive Turkey, India from trade privileges

Photo: EPA US President Donald Trump (R) welcomes Indian PM Narendra Modi (L) in the White House, Washington, 26 June 2017 (reissued 05 March 2019).

Under the order of President Donald Trump, the US will scrap the preferential trade status granted to India and Turkey, news wires reported on Monday. The US trade chief's office said in a statement that Washington “intends to terminate India's and Turkey's designations as beneficiary developing countries under the Generalised System of Preferences (GSP) programme because they no longer comply with the statutory eligibility criteria”. Under this programme, certain products can enter the US duty-free if countries meet eligibility criteria including “providing the US with equitable and reasonable market access”.

India has failed to provide assurances that it would allow required market access, while Turkey is “sufficiently economically developed” that it no longer qualifies, the statement said. India, however, “has implemented a wide array of trade barriers that create serious negative effects on United States commerce,” it added. The statement noted 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 programme.

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 on 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 a 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. 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 programmes”. Trump has made taking aim at what he considers imbalanced trade relationships a central plank of his presidency, sparking a trade war with Beijing that has dragged on for nearly a year.

Turkey's trade minister Ruhsar Pekcan said in a tweet that the US decision to end the preferential trade programme with Turkey is inconsistent with the two countries' aim to increase annual bilateral trade to $75bn. She added that the decision would harm American small- and medium-sized enterprises and manufacturers.

India's commerce ministry pointed out that it won't try to hold onto its preferential zero-tariffs status with the US after Washington's move. It reflects a failure for the two sides to come to agreement on various trade issues, but is not one India will try to fight, the ministry said.

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