USA to end trade preferences for Turkey, India

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U.S. President Donald Trump holds a bilateral meeting with India's Prime Minister Narendra Modi alongside the ASEAN Summit in Manila, Philippines November 13, 2017.

India's commerce ministry said Tuesday that it won't try to hold onto its preferential zero-tariffs status with the United States after Washington chose to drop it from its Generalized System of Preferences program.

Preferential trade treatment for India now allows $5.6bn (£4.3bn) worth of exports to enter the United States duty free, according to Reuters.

The move, the professor at the University of Kansas School of Law said in an interaction with BloombergQuint, signifies a change in tone of India-U.S. trade relations.

The US goods and services trade deficit with India was $27.3bn in 2017, the US Trade Representative's Office said. 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.

The Generalized System of Preferences program gives developing countries duty-free treatment for exports of thousands of products.

Reuters last month reported the planned USA action, which comes as the United States and China appear close to a deal that would roll back US tariffs on at least $200 billion worth of Chinese goods.

"In April 2018, the U.S. initiated a review of our GSP benefits, mainly on two industries. medical devices and dairy. So it seems like we're looking at a non-GSP trade with the USA", said Commerce Secretary Anup Wadhawan, adding that India would not engage on any retaliatory measures.

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GSP is a preferential tariff system extended by developed countries to developing countries, also known as beneficiary countries, to grow their economy.

Removing India from the preferential tariff system will take effect 60 days following the notification.

The statement also said that Turkey, after being designated a GSP beneficiary in 1975, has meanwhile demonstrated a "higher level of economic development", meaning that it can be "graduated" from the program. This includes data localization, tariffs that India charges US imports and new e-commerce rules.

India considerably capped the pricing of medical devices such as knee caps and stents a year ago, reducing it to as much as 60 per cent. India exported around $50 billion worth of goods to the United States in 2017.

Under an agreement taking shape, Beijing would lower some barriers on USA companies' operations in China and purchase large amounts American agricultural and energy goods if the United States lowered most of the tariffs in return.

Trade ties between India and the United States have been strained after New Delhi adopted new rules on e-commerce, preventing foreign retailers, U.S. giants such as Amazon and Flipkart owner Walmart, for selling goods online through their affiliated companies. "They charge us a lot", he had said. The products include motor vehicle parts, jewelry, handicrafts, carpets, marine produce and a range of raw materials such as granite (Aside: the Vietnam Memorial is built from granite imported from India).

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. 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.

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