U.S. to end preferential trade status for India, Turkey

US President Donald Trump delivers remarks in the State Dining Room at the White House in Washington US

Trump's decision comes at a hard time for India's prime minister, Narendra Modi.

U.S. president Donald Trump looked set to open a new front in his trade wars on Monday with a plan to end preferential trade treatment for India that allows duty-free entry for $5.6bn worth of the country's exports to the United States.

Hours after the United States announced its intention to "terminate" New Delhi's designation as a beneficiary of its Generalised System of Preferences (GSP), Commerce Secretary Anup Wadhawan said India does not plan to impose retaliatory tariffs on the USA goods.

Mr. Wadhawan added that India was still in talks with the United States on the higher import duties that country charges on steel and aluminium, and said that India was still reviewing whether it would impose retaliatory tariffs or not.

"India has implemented a wide array of trade barriers that create serious negative effects on United States commerce", said the USTR, which estimates the United States ran a goods and services trade deficit of $27.3 billion with India in 2017.

India is the world's largest beneficiary of the GSP programme and ending its participation would be the strongest punitive action against India since Trump took office in 2017, PTI said.

"I will continue to assess whether the Government of India is providing equitable and reasonable access to its markets, in accordance with the GSP eligibility criteria", he said.




The decision comes as the USA is reported to be making headway in trade negotiations with China aimed mainly at cutting American trade deficits with a deal expected soon. This was primarily because the economy of Turkey had improved a lot in the last four-and-a-half decades, he said.

The "actual benefit", which will be impacted from the US' decision will only be to the tune of $190 million, moderate vis-a-vis to the total volume of trade, the commerce secretary said in a media briefing.

Countries can also be graduated from the GSP programme, depending on factors related to economic development.

Reacting to the move, a top Indian trade official said New Delhi does not plan to impose retaliatory tariffs on U.S. goods.

The announcement that could be seen as a major setback to bilateral trade ties. India declined saying it had commitments to make such medical devices affordable to the Indian patients, but agreed to open up the Indian market for a wide variety of U.S. farm produce - from cherries to chicken to milk products, which New Delhi had long resisted because of reservations over USA farm practices.

India's trade ministry said in a statement that the trade deficit with the United States was falling and in 2018 it is estimated to have narrowed by over $4 billion. "Despite intensive engagement, India has failed to take the necessary steps to meet the GSP criterion", the trade representative's office added.

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

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