US to scrap preferential trade status for India, Turkey

Turkish President Recep Tayyip Erdogan, L is shown with  Indian Prime Minister Narendra Modi March 5, 2019
Turkish President Recep Tayyip Erdogan, L is shown with Indian Prime Minister Narendra Modi March 5, 2019

At President Donald Trump’s direction, Washington intends to scrap the preferential trade status granted to India and Turkey, the US trade chief’s office said Monday.

The move comes as the US and China seek to negotiate an exit from a costly trade war between the two countries that is part of the Trump administration’s efforts to address what it views as inequitable commercial relationships with other states.

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 Office of the US Trade Representative 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, it added.

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.”

India, however, “has implemented a wide array of trade barriers that create serious negative effects on United States commerce,” the statement said.

It 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.

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.

– ‘Intensive engagement’ –

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.

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.”

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.

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 the ultimatum to further increase tariffs, satisfied by progress made in several rounds of talks.

Under an agreement taking shape, Beijing would lower some barriers on US companies’ operations in China and purchase large amounts American agricultural and energy goods if the United States lowered most of the tariffs in return.

However, leading news reports have said significant details remained unresolved.