Washington: US President Donald Trump Monday said he intends to end the preferential trade status granted to India and Turkey, asserting that New Delhi has failed to assure America of "equitable and reasonable" access to its markets, an announcement that could be seen as a major setback to bilateral trade ties.
President Trump notified Congress in letters of his "intent to terminate" trade benefits for both the countries under the Generalized System of Preferences (GSP) eligibility criteria.
"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 Office of the US Trade Representative said in a statement.
Under the United States Generalized System of Preferences (GSP) programme, nearly 2,000 products including auto components and textile materials can enter the US duty-free if the beneficiary developing countries meet the eligibility criteria established by Congress.
Under the GSP programme, "certain products" can enter the US duty-free if countries meet eligibility criteria including "providing the US with equitable and reasonable market access".
India was the largest beneficiary of the program in 2017 with USD 5.7 billion in imports to the US given duty-free status and Turkey the fifth largest with USD 1.7 billion in covered imports, according to a Congressional Research Service report issued in January.
"However, India has implemented a wide range of trade barriers that create serious negative impacts on the United States commerce," the 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 programme", the statement said.
Meanwhile, US President Donald Trump in a letter to Speaker of the US House of Representatives Nancy Pelosi, 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 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," Trump said in the letter to congressional leaders on Monday.
"I will continue to assess whether the Government of India is providing equitable and reasonable access to its markets, in accordance with the Generalized System of Preferences (GSP) eligibility criteria," Trump said in his letter, a copy of which was released to the press.
On the other hand, India downplayed the US decision and said it will have a little or marginal impact on trade between the two countries.
"India felt it had arrived at a fairly meaningful offer balancing US aspirations with our concerns, which was not workable with the US side. This is a given situation now. So it seems like we're looking at a non-GSP trade with the US," said Commerce Secretary Anup Wadhawan.
"Our assessment is there won't be significant impact on exports and, no significant edge to competitors," he said, adding that the tariffs that India imposes are "very consistent with World Trade Organization-bound rates."
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