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Preferential Trade Status

The U.S. plans to revoke the preferential trade status for India and Turkey under the Generalized System of Preferences (GSP) due to non-compliance with eligibility criteria. India argues its tariffs are within WTO commitments and is open to discussions, while Turkey's trade minister expresses concern over the decision's impact on bilateral trade. The changes will take effect after a 60-day notification period to Congress and the affected countries.

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2 views

Preferential Trade Status

The U.S. plans to revoke the preferential trade status for India and Turkey under the Generalized System of Preferences (GSP) due to non-compliance with eligibility criteria. India argues its tariffs are within WTO commitments and is open to discussions, while Turkey's trade minister expresses concern over the decision's impact on bilateral trade. The changes will take effect after a 60-day notification period to Congress and the affected countries.

Uploaded by

wassimwac05
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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U.S.

to end preferential trade status for


India and Turkey
Updated 21:43, 05-Mar-2019

At U.S. President Donald Trump's direction, Washington


intends to scrap the preferential trade status granted to
India and Turkey, the U.S. trade chief's office said
Monday local time.
India responded that its tariffs are within its bound rates
under the World Trade Organization (WTO)
commitments, and it is ready to talk with the U.S. about
trade-related issues, according to an official
communication of the country's Commerce and Industry
Ministry on Tuesday.
Turkey's trade minister also responded Tuesday that the
U.S. intends to end the preferential trade status granted to
Turkey that conflicted with the NATO allies' push to
increase commercial exchanges.
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 U.S. Trade
Representative said in a statement Monday.
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 leaders in Congress.
The GSP program is the oldest trade concession plan and
the largest one in scale in the United States. It aims to
promote developing countries' and regions' economic
development through tariff reduction and to promote
trade diversification. There are currently 120 countries
and regions under the program.
India "has implemented a wide array of trade barriers
that create serious negative effects on United States
commerce," the U.S. said in the statement Monday.
At the end of December, India suddenly announced the
revision of rules for the country's e-commerce market, a
move considered against Amazon and Wal-Mart which
have invested heavily in India.
The country then launched new information and digital
regulations, forcing global credit card payment
companies such as MasterCard and Visa to transfer their
data to India, and it imposed higher tariffs on electronics
and smartphones.
"Indian policymakers' pressure on U.S. companies will
continue to increase, and the policy change will benefit
local companies, which triggered strong dissatisfaction
from the American companies. The latter filed
complaints and pressure on U.S. agencies in charge of
foreign affairs and commerce and demanded the U.S.
government to recover losses for them. These factors
have contributed to the U.S. retaliatory measures against
India," Qian Xiaoyan, a reporter from Yicai, said.
Under the GSP program, certain products can enter the
U.S. duty-free if countries meet eligibility criteria
including "providing the United States with equitable and
reasonable market access." India has failed to provide
assurances that it would allow required market access,
according to the U.S. statement.
The change for India came after "intensive engagement"
between New Delhi and Washington, Trump wrote in one
letter 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.
However, the Indian statement said specific U.S. requests
were "not found reasonable and doable" at this time by
various concerned government departments, in the light
of public welfare concerns reflective of India's
developing country status and its national interest.
In India's case, the GSP concessions extended by the
U.S. amounted to duty reduction of only 190 million
U.S. dollars annually, said the Indian statement.
"It is pertinent that India's tariffs are within its bound
rates under WTO commitments, and are on the average
well below these bound rates," it said.
"India's trade-weighted average tariffs are 7.6 percent,
which is comparable with the most open developing
economies, and some developed economies. On
developmental considerations there may be a few tariff
peaks, which is true for almost all economies," it further
said.
The Indian statement also said, "India was agreeable to a
very meaningful mutually acceptable package to be
agreed to at this time, while keeping remaining issues
under discussion in the future."
Turkey can be 'graduated' from GSP
The U.S. statement 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.
Trump said in his letter on Turkey that the country's
economy "has grown and diversified," and noted that
Istanbul has already "graduated from other developed
countries' GSP programs."
The U.S. decision to cancel Turkey's preferential trade
status came at a time of strained relations between
Turkish President Erdogan's and Trump. The U.S.
previously doubled tariffs on Turkish steel and
aluminum, and sanctioned two senior Turkish officials.
After the retaliatory actions from Turkey, the U.S. re-
examined last August whether Turkey was eligible for
preferential trade status.
"This decision contradicts our mutual objective of
reaching bilateral trade volume of 75 billion U.S.
dollars... The decision will also negatively affect U.S.
small and medium-sized enterprises and manufacturers,"
Turkey's Trade Minister Ruhsar Pekcan tweeted.
"We still would like to pursue our target of increasing our
bilateral trade with the U.S. who we see as our strategic
partner, without losing any momentum," she said.

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