US to end preferential trade status for India, Turkey

US to end preferential trade status for India, Turkey

US President Donald Trump said on Monday he intends to end India's preferential trade treatment under a program that allows US $5.6 billion worth of Indian exports to enter the United States duty free.

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

India exports goods worth United States dollars 5.6 billion under the GSP, and the duty benefit is only USD 190 million annually, Commerce Secretary Anup Wadhawan said.

Speaking about India, Trump called it "a very high tariff nation" and accused the state of high tariffs: "When we send a motorcycle to India, it's a 100 percent tariff".

US' trade preference programme, GSP, aims to promote economic development in beneficiary countries by removing duties on products.

India mainly exports raw materials and intermediate goods such as organic chemicals to the United States, he said.

Reuters reported that the move by Washington was the most punitive measure taken against India since Trump took office.

The GSP criteria include, among others, respecting arbitral awards in favour of USA citizens or corporations, combatting child labour, respecting internationally recognised worker rights, providing adequate and effective intellectual property protection and providing the U.S. with equitable and reasonable market access.

"It is extraordinary how Trump manages to demarcate trade from geopolitics, when in the real world they are intimately linked", Blaxland said.

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

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The official said India had made a friendly gesture by not imposing retaliatory tariffs on steel and aluminium.

"Despite intensive engagement, India has failed to take the necessary steps to meet the GSP criterion", it added.

On other concerns being raised by the United States related to duty cut on IT products, Wadhwan said India's duties are very moderate on those items and they are not "import stopping". The Harley-Davison tariff issue that he raked up several times over the past year is worth a laughably small amount of money.

The Office of the U.S. Trade Representative says the change will be enacted by presidential proclamation, but not before 60 days.

"It's meant for least-developed countries, and India has graduated out of that", Mukherjee said.

Reuters last month reported the planned US action, which comes as the United States and China appear close to a deal to roll back USA tariffs on at least $200 billion worth of Chinese goods. "The United States designated Turkey as a GSP beneficiary developing country in 1975", explained the statement.

"Evidently, all the flexibility we showed did not meet their requirements", the official added.

"The other areas of concern are in the IT space where we had some concerns that if we simply let down our guard, the benefits in the $20 billion market would go not to the USA [but to another country], because the amount of [IT sector] imports from the USA is less than half a billion dollars", the official said.

He said it was primarily because the economy of Turkey had improved a lot in the last four-and-a-half decades.