US-President Trump says he might end India's preferential trade treatment
Arguing that New Delhi had failed to assure America that it would provide equitable and reasonable access to its markets in numerous sectors, US President Donald Trump yesterday said he might end GSP designation of India. He informed the US-Congress about his intent to terminate the designation of India and Turkey as a beneficiary developing country under the Generalised System of Preferences (GSP) program.
Trump shoots letter to Speaker of House of Representatives
In a letter to the Speaker of the US House of Representatives, Nancy Pelosi, Trump said he was determined that New Delhi had "not assured" the US that it would "provide equitable and reasonable access" to the markets of India. "I'll continue to assess whether India is providing equitable and reasonable access to its markets, in accordance with the GSP eligibility criteria," said Trump.
In separate letter, Trump mentioned GSP termination of Turkey
In a separate letter, Trump also informed the Congress of his intent to terminate the GSP beneficiary designation of Turkey. This was primarily because the economy of Turkey had improved a lot in the last four-and-a-half decades, he said. "In the four-and-a-half decades since Turkey's designation as a GSP beneficiary developing country, Turkey's economy has grown and diversified," he said.
Increased GNI, decreased poverty-rates are evidence of Turkey's development: Trump
"Increases in Gross National Income (GNI) per capita, declining poverty rates and export diversification by trading partner and by sector are all evidence of Turkey's increased level of economic development," the US President argued. "In addition, Turkey has graduated from other developed countries' GSP programs due to its increase in economic development or through reciprocal arrangements," he further said.
Letter could be seen as setback in India-US bilateral relationship
Trump's letter to Pelosi could be seen as a major setback in India-US bilateral relationship, in particular in the arena of trade and economy. In a separate statement, the US Trade Representative (USTR) said India's termination from GSP followed its failure to provide the US with assurances that it would provide equitable and reasonable access to its markets in numerous sectors.
Changes will be enacted by a Presidential Proclamation, said USTR
Turkey's termination from GSP followed a finding that it was sufficiently economically developed and should no longer benefit from preferential market access to the US-market, the statement said. "By statute, these changes may not take effect until at least 60 days after the notifications to Congress and the governments of India and Turkey, and will be enacted by a Presidential Proclamation," the USTR said.
Under GSP, certain products of developing-countries can enter US duty-free
Under the US GSP program, certain products can enter the US duty-free if the beneficiary developing countries meet the eligibility criteria established by Congress. The GSP criteria include respecting arbitral awards in favor of US citizens or corporations, combating child labor, respecting internationally recognized worker rights, providing adequate and effective intellectual property protection and providing the US with equitable and reasonable market access.
India has implemented a wide array of trade barriers: USTR
Countries can also be graduated from the GSP program, depending on factors related to economic development. The Trump Administration had launched an eligibility review of India's compliance with the GSP market access criterion in April 2018. Arguing over trade barriers, the USTR said, "India has implemented a wide array of trade barriers that create serious negative effects on United States commerce."
US designated Turkey as beneficiary developing country in 1975
The US Trade Representative further argued, "Despite intensive engagement, India has failed to take the necessary steps to meet the GSP criterion." The United States had designated Turkey, one of the 120 countries that participate in the GSP, as a beneficiary developing country in 1975.
