U.S. Remove India and Turkey out of GSP
U.S. Trade Representative Robert Lighthizer announced that the United States intends to remove India and Turkey out of the Generalized System of Preferences (GSP), because India failed to meet certain conditions to stay in program, while Turkey is sufficiently economically developed and requires no preferential market access to the U.S. market.
India was the largest beneficiary of the program in 2017 with $5.7 billion in imports to the U.S. given duty-free status and Turkey the fifth largest with $1.7 billion in covered imports, according to a Congressional Research Service report issued in January. Total Indian exports to the U.S. were $48.6 billion, making the GSP up to 11.5% of total Indian exports to India.
“India exports goods worth $5.6 billion under the GSP, and the duty benefit is only $190 million annually,” India’s commerce secretary, Anup Wadhawan, said, according to the Hindustan Times. India also officially stated that it was willing to consider a suitable trade margin approach for the medical devices; as well as simplified dairy certification requirements regarding feed sources.
U.S. trade preference programs such as the Generalized System of Preferences (GSP) provide opportunities for many of the world’s poorest countries to use trade to grow their economies and climb out of poverty.
Under the United States GSP program, certain products can enter the United States duty-free if beneficiary developing countries meet the eligibility criteria established by Congress. GSP criteria include, among others, respecting arbitral awards in favor of United States citizens or corporations, combating child labor, respecting internationally recognized worker rights, providing adequate and effective intellectual property protection, and providing the United States with equitable and reasonable market access. Countries can also be graduated from the GSP program depending on factors related to economic development.
The United States launched an eligibility review of India’s compliance with the GSP market access criterion in April 2018. India has implemented a wide array of trade barriers that create serious negative effects on United States commerce. Despite intensive engagement, India has failed to take the necessary steps to meet the GSP criterion.
The United States designated Turkey as a GSP beneficiary developing country in 1975. 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.