WASHINGTON (AFP) – Washington will scrap the preferential trade status of India and Turkey, the United States (US) Trade Chief’s Office said, as US President Donald Trump ramps up his battle against what his administration views as unfair foreign trade practices.
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) programme had granted favourable treatment of imports from both countries for a range of manufactured goods, such as automotive parts, tyres 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, the Office of US Trade Representative Robert Lighthizer said in a statement on Monday. India, the biggest beneficiary of the GSP programme, had failed to assure Washington that it would allow required market access and instead erected “trade barriers that create serious negative effects on US commerce,” the statement added.
New Delhi played down the effect of the decision, with Commerce Secretary Anup Wadhawan saying the withdrawal of the programme would not have a “significant impact” on Indian trade.
Of India’s USD80 billion in annual exports to the US, only USD5.6 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 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 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 programme, 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 programmes”.
Monday’s decision came as Washington and Beijing seek to negotiate an exit to the Trump administration’s most high-profile and costly trade battle. The US and China eventually agreed to a 90-day truce to work out their differences, and Beijing and Washington have been edging closer to an agreement in recent weeks.
The truce was scheduled to end on Friday, but Trump lifted an ultimatum on further tariff hikes after expressing satisfaction with the progress made in several rounds of talks.