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HomeDiplomacyTrump intends to end special trade concessions to India in 60 days

Trump intends to end special trade concessions to India in 60 days

India was the largest beneficiary of the concessions in 2017 with $5.7 billion in imports to the US given duty-free status.

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Washington: President Donald Trump has announced he plans to end key trade preferences for India and Turkey, in the latest move by the U.S. to counter what it calls unfair trade practices.

Trump notified Congress on Monday in letters of his “intent to terminate” trade benefits for both countries under the generalized system of preferences. The notification starts a 60-day countdown before the president can take the action on his own authority, the U.S. Trade Representative’s Office said in a statement.

Their designation under the program allows duty-free entry of about 2,000 products including auto components, industrial valves, and textile materials. The president can still walk back his notice to terminate the preference programs if the two countries satisfy the concerns of his administration.

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.

The duty benefit to India on exports under preferential treatment was “relatively limited” at $190 million and its withdrawal won’t have significant impact, India’s Commerce Secretary Anup Wadhawan told reporters in New Delhi on Tuesday.

Indian stocks gained, recouping earlier losses, as investors looked beyond Trump’s plans to end key trade benefits for the country to focus on the national ballot due by May. The country’s benchmark stock index S&P BSE Sensex Index fell as much as 0.4 percent to 35,926.94 on Tuesday before recovering to 36187.36 at 1:17 p.m. local time.

The U.S. said in April it would review India’s eligibility for the generalized system of preferences program after some U.S. companies said dairy and medical devices shipments to India were being hurt by non-tariff barriers. Trump said in a notification letter that India “has not assured the United States that it will provide equitable and reasonable access to the markets of India.”

Despite high-level talks over the last year, India had showed little inclination to budge, Richard Rossow, senior adviser and Wadhwani chair in U.S.-India policy studies at the Center for Strategic and International Studies in Washington, said in an email.

“Ideologically, I understand why the US felt it had to revoke GSP. Nothing else worked,” Rossow said. “I hope this trade spat doesn’t end up and spill over into the real world,” he said, noting “trade tensions could escalate further in the coming days.”

Trade Gap

India’s goods exports to the U.S. stood at $48 billion in 2018, growing 13 percent on year, according to India’s commerce ministry. India’s trade surplus of $21 billion with the U.S. made the treasury keep the South Asian nation on a watch list of currency manipulators.

To avert a trade war with the U.S., India had deferred the imposition of retaliatory tariffs on 29 imports in response to duty increases on a range of products. Muted exports amid a global slowdown and tariff wars have added to risks in Asia’s third largest economy.

India had worked out issues with the U.S. but there was an additional demand of reducing tariffs, said Wadhawan, adding the $2.6 trillion economy had to be conscious of its development concerns and can’t compromise on affordability of medical devices.

Trump said in a separate letter that Turkey is no longer a “developing country based on its level of economic development.”

Trump’s decision comes at a difficult time for India’s prime minister, Narendra Modi. He faces a general election in a few weeks even as the longstanding animosity between India and Pakistan has escalated into violent clashes that could lead to all-out war.

Trump has had several disagreements with Turkey’s leader, Recep Tayyip Erdogan. His country’s once-robust economy has weakened, and that will likely be a key issue in local elections at the end of the month. –Bloomberg


Also read: Why Donald Trump only has a muted statement to make on India-Pakistan crisis


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1 COMMENT

  1. News report has appeared on 4 March , 2019 to say that US President Donald Trump is planning to scrap preferential trade status for India and Turkey. Obviously , the news has the potential to cause likely stress of financial and economic nature to the concerned countries. In this context , it may be apt to refer to this Vedic astrology writer’s predictive alert for more care and appropriate strategy in article – “ The Year 2019 Astrologically for India” – published last year on 7 October , 2018 at theindiapost.com. Since worrisome news has appeared on 4 March 2019 , the predictive alert for February – March 2019 in relation to India is being reproduced here as follows :-
    “ February – March 2019. These nearly two months appear to be calling for more care and appropriate strategy in relation to more than one front…………………….Some sort of crisis or worrisome concerns in financial and economic sector look to be there”.
    Such predictive alerts were also made by this writer in November and December 2019 through article “ World Predictions 2019” circulated widely highlighting similar concerns in vulnerable countries which included India and Turkey also. It was said that economic and financial stress or crisis to the existing Govts or comparable organizations could cause major worry in said countries during first three months of 2019 , more so February -March. Furthermore , in the footnote , the period of worry was brought closer and made precise by saying that such dates as 14 February or around , 22 February or around and 3 March or around could be signaling worry for more care and appropriate strategy. https://www.theindiapost.com/headline/the-year-2019-astrologically-for-india/

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