trade agreements

U.S. to End Trade Preference Program for India and Turkey

Brian German Agri-Business, Trade

An announcement from the Office of the United States Trade Representative indicates that Turkey and India will both be removed from a trade preference program afforded by the U.S.  The two countries have been included in the Generalized System of Preferences (GSP) program for several years.  The GSP program is designed to assist developing countries that may not have a particularly strong economy to better compete in the trade market.

 trade preference programCreated in the Trade Act of 1974, GSP is the largest and oldest American trade preference program.  The GSP program allows particular products to be exported to the U.S. duty-free so long as eligibility requirements set by Congress are upheld.  Some of the criteria include recognizing worker rights as well as combatting child labor.  Other requirements for GSP status include intellectual property protection and affording the U.S. reasonable market access.

Each of the countries is being removed from the program for different reasons.  Turkey has been classified as a GSP beneficiary developing country from nearly the beginning of the program.  The country has since experienced dramatic growth in Gross National Income per capita while poverty rates were on the decline, exemplifying economic development that no longer warrants inclusion in the GSP program.

India has put several trade barriers in place that have negatively affected U.S. commerce and has been under review for eligibility for the GSP program since April 2018.  The country exports more than $5 billion worth of goods to the U.S. every year.  Official removal from the program will be a 60-day process that will ultimately make it challenging for Indian and Turkish exports to keep their prices at their current value.

In a letter to congressional leaders, Trump said: “I am taking this step because, after intensive engagement between the United States and the government of India, I have determined that India has not assured the United States that it will provide equitable and reasonable access to the markets of India.”

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Brian German

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Ag News Director, AgNet West