United States ends preferential trade deals with India, Turkey

File photo of USA president Donald Trump and Prime Minister Narendra Modi.

The Office of the US Trade Representative said Washington "intends to terminate India's and Turkey's designations as beneficiary developing countries under the GSP programme because they no longer comply with the statutory eligibility criteria".

The offer did not cut any ice with Trump, who told USA lawmakers in a letter that India "has not assured the United States that it will provide equitable and reasonable access" to its markets and he therefore intends to terminate the preferential treatment that India has enjoyed since 1976.

Notably, India exports worth $5.6 billion that enter the United States duty-free.

"We don't really agree that India is a high-tariff nation", Wadhawan said countering a statement made by Donald Trump a few months ago when he said that India is high-tariff country.

The US goods and services trade deficit with India was US $27.3 billion in 2017, according to the US Trade Representative's Office. While it is not clear whether India will take retaliatory action, the world's fifth-largest economy has indicated that retaliatory tariffs will be kept out of current discussions.

"In the four and a half decades since Turkey' s designation as a GSP beneficiary developing country, Turkey's economy has grown and diversified", Trump wrote in a letter to lawmakers, adding Washington "remains committed to fair and reciprocal trade with Turkey".

United States and Chinese trade representatives are wrapping up talks on a new deal which will end President Trump's trade war with Beijing.

Indian trade negotiators would look at the new NAFTA, TPP and other trade deals for specific provisions for access to markets for dairy and medical devices.

New Delhi played down the effect of the decision, with Commerce Secretary Anup Wadhawan saying the withdrawal of the program would not have a "significant impact" on Indian trade.

It said Turkey, after being designated a GSP beneficiary in 1975, has demonstrated a "higher level of economic development", meaning it can be "graduated" from the programme.

"The benefit to industry is low, USA tariffs are already low", said another government official, who spoke on condition of anonymity.

India has been the biggest beneficiary of the GSP regime and accounted for over a quarter of the goods that got duty-free access into the USA in 2017.

Most of the exports were intermediate goods not produced in the United States because they were low in the manufacturing value chain, it added.

As many as 1,900 Indian products from sectors such as chemicals and engineering get duty free access to the United States market under the GSP, introduced in 1976. The issue of Indian tariffs being high has been raised from time to time. India exported around $50 billion worth of goods to the United States in 2017.

"Despite intensive engagement, India has failed to take the necessary steps to meet the GSP criterion", it added. As many as 5,111 Indian products, ranging from textiles to engineering goods, are covered under GSP, of which India was using only 2,167 tariff lines.