Trump targets India and Turkey in trade crackdown

Donald Trump says he plans to end India's preferential trade treatment

Donald Trump says he plans to end India's preferential trade treatment

GSP is a preferential tariff system extended by developed countries to developing countries, also known as beneficiary countries, to grow their economy.

However, Trump who had vowed to reduce United States trade deficits has repeatedly called out India for its high tariffs.

The US will also end Turkey's preferential trade status, saying it no longer qualifies.

The US goods and services trade deficit with India was $27.3bn in 2017, the US Trade Representative's Office said.

Trump notified Congress in letters of his "intent to terminate" trade benefits for both countries under the generalized system of preferences.

The GSP programme allows duty-free entry of 1,784 products from India into the USA, benefitting exporters of textiles, engineering, gems and jewellery and chemical products. Notably, India exports worth $5.6 billion that enter the United States duty-free.

The changes can not take effect for at least 60 days following the notification of the US Congress as well as the countries affected - a process Trump began on Monday with letters to the speaker of the House of Representatives and the president of the Senate.

India has said the US' withdrawal of duty benefits to its $5.6 billion of exports will not have a major impact on India's bilateral trade and denied United States president Donald Trump's accusation of the country having high tariffs.

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Indian Commerce Secretary Anup Wadhawan has said that the withdrawal of the GSP will not significantly impact India's exports to the US. Congress establishes the conditions of eligibility for GSP, which include "providing the United States with equitable and reasonable market access, protecting workers' rights and combating child labour".

At the heart of the dispute was the U.S. insistence that India should remove the price cap on knee implants and stents - which New Delhi now regulates as "essential medicine" but which is a money-spinner for western companies.

"An increase in Gross National Income (GNI) per capita, declining poverty rates, and export diversification, by trading partner and by sector, are evidence of Turkey's higher level of economic development", it said.

India said it did not plan to impose retaliatory tariffs on USA goods, saying the preferential terms bring "actual benefit" of just $250m a year.

Meanwhile, Trump said that he will continue to monitor if India is "providing equitable and reasonable access to its markets" and meet the GSP eligibility criteria.

Trump has made taking aim at what he considers imbalanced trade relationships a central plank of his presidency - sparking a trade war with Beijing that has dragged on for almost a year.

New Delhi hoped the planned withdrawal of the preferential trade treatment to India would not lead to trade hurdles, an Indian government source said on Tuesday, adding that the "actual benefit" to India was only $250m a year.

Washington "remains committed to fair and reciprocal trade with Turkey", the letter said.

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