I intend to end preferential trade status for India, Turkey: Trump

WION Web Team
New Delhi, Delhi, India Published: Mar 05, 2019, 05:55 AM(IST)

File photo of US President Donald Trump with Indian Prime Minister Narendra Modi. Photograph:( Reuters )

Story highlights

India reportedly enjoys preferential tariff on exports worth of nearly $ 5.6 billion under the GSP route out of the total exports of $48 billion in 2017-18.

The United States President Donald Trump intends to terminate the Generalised System of Preferences (GSP) program with India and Turkey, US trade chief's office said on Monday.

GSP is a preferential tariff system extended by developed countries to developing countries, also known as beneficiary countries, to grow their economy. It is a preferential arrangement that allows concessional low/zero tariff imports from 120 designated beneficiary countries and territories. 

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.

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.

Also read: Want 'reciprocal tax' on India to match tariffs on US exports, says Donald Trump

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 read.

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

The statement also said that 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, who has vowed to reduce US trade deficits, has repeatedly called out India for its high tariffs.

The US goods and services trade deficit with India was $27.3 billion in 2017, according to the US Trade Representative's Office.

India is the world's largest beneficiary of the GSP program and ending its participation would be the strongest punitive action against India since Trump took office in 2017.

"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 the letter sent to Congress.

India reportedly enjoys preferential tariff on exports worth of nearly $ 5.6 billion under the GSP route out of the total exports of $48 billion in 2017-18.

On Saturday as well, Trump accused India of being a "high tariff nation" and threatened to impose "a reciprocal tax" to match heavy duties that New Delhi imposes on goods from the United States.

Addressing the last day of a four-day annual Conservative Political Action Conference (CPAC) in Maryland, the US President said, "India is a very high tariff nation. When we send a motorcycle to India, they charge 100 per cent tariff. When India sends a motorcycle to us, we charge nothing. I want a reciprocal tax, at least I want to charge a tax."

(With inputs from agencies)

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