I intend to end preferential trade status for India, Turkey

WEB Modi-Trump

WEB Modi-Trump

The US plans to end preferential trade status for India, under a scheme which allows certain products to enter the US duty-free.

The United States's decision to end preferential trade with Turkey is at odds with the goal of raising trade volume between the two countries to $75bn, Turkish trade minister Ruhsar Pekcan said.

One of the reasons why the trade ties between India and the USA has gained intensity in the recent months is because Trumps" "Buy American, Hire American" plan directly clashed with Modi's "Make in India' campaign.

The U.S. accounts for 15 percent of India's exports, with goods worth $48 billion shipped to them. The US had announced a review of India's continued eligibility for the programme in April 2018, citing market access concerns, specifically for dairy products and medical devices. But it is the timing of the move that will test India's leverage with the Trump administration.

In his letter informing the US Congress of his intent to throw out India as a GSP beneficiary, President Trump argues that New Delhi has failed to assure Washington that it will provide equitable and reasonable access to its markets in numerous sectors.

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.

Mr Trump has vowed to cut USA trade deficits and repeatedly criticised India for its high tariffs since taking office in 2017.

Indian officials played down the impact of the move, saying the preferential treatment brought benefits of just around $200 million annually.

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On other concerns being raised by the USA related to duty cut on IT products, Wadhwan said India's duties are very moderate on those items and they are not "import stopping". Trump notified Congress on Monday. Scrapping the benefits under the Generalized System of Preferences (GSP) will take at least 60 days, officials said.

Although Trump told United States lawmakers in his letter that he will "continue to assess whether the Government of India is providing equitable and reasonable access to its markets", and the withdrawal will kick in only after 60 days through a presidential proclamation, there is little chance of any deal being salvaged in the two month window.

But Indian officials maintain the GSP withdrawal will not be a crushing blow; exports will continue, except they will be subject to tariffs.

The U.S. Generalized System of Preferences program, known as GSP, provides duty-free entry into the United States for more than 3,500 products from more than 100 countries.

The primary aim of the GSP is to help developing countries, particularly in sectors where the benefits can reach the poor.

The U.S. and China eventually agreed to a 90-day truce to work out their differences, and Beijing and Washington have been edging closer to an agreement in recent weeks.

Although India felt that it has arrived at a fairly meaningful offer which balanced some non-negotiable public health concerns, it does not work for the United States and "they made a decision to withdraw the benefits back", the commerce secretary noted. It is amply evident that after India opened up in 1991 on the trade front, there have been significant gains thanks to global trade, especially in services, and which fuelled double digit growth in exports during the high growth years between 2004-05 to 2012-13, leading to creation of more jobs too.

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