President Trump announced removal of India and Turkey from GSP

US President Donald Trump announced his Intent to revoke India and Turkey from Generalized System of Preferences (GSP) on March 4th.  GSP is preferential tariff system which provides reduced tariff rates for certain products from certain developing countries. GSP provides for a formal system of exemption from the more general rule of the Wold Trade Organization.Proposed Tariff List on Chinese Products

India and Turkey export a broad range of products to US without paying tariff rates. As the decision will take effect India and Turkey will not be able to export without paying tariff on those certain goods.

India’s removal came after when it failed to provide assurance that it would allow US to access the required market. US asked India to provide equitable and reasonable access to its market for a range of US goods. 

India is the biggest beneficiary of GSP with the export of $5.6 billion according to 2017 trade reports while the total GSP imports in the US is around $20 billion. 

India and the US have specific goals in mind when in their trade relations

US Issues:

  • US wants lower duties on its exports to raise shipment to reduce deficit with the countries it has a deficit.
  • Washington is demanding for zero duty on Harley- Davidson motorcycles.
  • US wants India to remove the price caps imposed on medical devices.
  • US wants India to remove barriers to import dairy products and give unconditional market access.

India’s issues: 

  • Visas: India wants US to remove restrictions on H-1B visas and cancellation of spouse visas. 
  • US imposed higher duties on India’s steel and aluminium.

In case of Turkey, it is being terminated based on its high level of economic development. Trump found Turkey as a developed country which was no more eligible for GSP criteria.

According to US law President must give 60 days’ notice to Congress and the recipient-country before removing GSP eligibility. Therefor, tariffs of the eligible products will increase after the removal of both the counties which can take effect by May 3, 2019.

Read details on Official United State Trade Representative Website: Click Here

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