It Looks Like Trump Has New Trade Foes: India and Turkey

Anna Jefferson
March 7, 2019

It is an outcome of a review of the programme which was undertaken in April, 2018 following charges by the US Trade Office that India had created a wide array of trade barriers.

In a statement given to reporters, U.S. Trade Representative (USTR) Robert Lighthizer stated the reasons for India's termination of GSP status.

The Trump administration notified Congress on Monday that it wants to scrap trade concessions for India, the largest beneficiary of the so-called generalized system of preferences that impacts $5.7 billion worth of goods.

He said "the benefits in absolute sense and a percentage of trade involved are very minimal and moderate".

The actual benefit from preferential treatment is of $190 million since India used the concession for only 1,784 products out of 3,700 covered, he said.

On the dairy sector, "given our religious and cultural concerns, we have a requirement that there should be a certificate that source of the dairy product should have never been fed animal derived feed". "We had conceded most of their demands and had indicated our readiness to discuss the few remaining ones as well", an official close to the negotiations said, adding, "but they seemed to be in the mood to go for all".

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Donald Trump, according to a report by Reuters, wrote in a letter to congressional leaders, "I am taking this step because, after intensive engagement between the United States and the government of India, I have determined that India has not assured the United States that it will provide equitable and reasonable access to the markets of India".

Responding to U.S. claims, the secretary said that a suitable balance has to be found in terms of meeting genuine requirements of the United States supplier to get a fair return and "as (we) know the balance was quite distorted prior to our price controls".

India was ready to address USA concerns regarding medical devices in principle, by putting in place a suitable trade margin approach in a reasonable time-frame to balance concerns about fair pricing for the consumers and adequate remuneration for the suppliers.

In April 2018, the USA initiated a review of GSP benefits on account of representations by dairy and medical industries.

Turkey's designation was terminated as it was discovered that the Eastern European country was "economically developed and should no longer benefit from preferential market access", it said.

Mr Wadhawan added India does not plan to slap tit-for-tat tariffs on American goods in response to being dumped from the GSP. They charge 100 percent but when India sends a motorcycle to us, we brilliantly charge them nothing.

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Currently, the two countries are engaged in discussions over various trade issues. "But that is a separate issue from the GSP".

Last year, India was one of the countries on which the USA imposed penal import duties on aluminium and steel, citing security threats.

The US was India's top export destination in 2017-18 with shipments worth $47.88 billion. That aggression is on display in trade talks with countries ranging from China and Japan, to the United Kingdom and EU. India is by far the biggest beneficiary of the US' GSP, which has been in place in some form since the mid-1970s.

"We still would like to pursue our target of increasing our bilateral trade with the USA who we see as our strategic partner, without losing any momentum", she said.

About $ 5.6 billion worth of Indian exports to the U.S. benefit from the duty-free channel that the Generalised System of Preferences (GSP) offers. It has already been established earlier that GSP benefits can not be held ransom and retaliatory demands made.

The Indian and Turkish currencies barely skipped a beat after Donald Trump announced that he would end the countries' trade-preference status with the US, with the rupee posting the biggest gain of any emerging-market currency so far this week.

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