On Monday, March 4th, President Trump announced that India and Turkey will no longer benefit from the United States’ Generalized System of Preferences (“GSP”) program. The GSP program, established by the Trade Act of 1974, is designed to promote economic development by eliminating duties on certain eligible products when imported from a beneficiary country or territory. On March 23, 2018, President Trump signed a law renewing the GSP program through December 31, 2020.
According to the Office of the U.S. Trade Representative (“USTR”), neither India nor Turkey meet the statutory eligibility criteria to continue as beneficiary countries under the GSP program. USTR has found that Turkey is “sufficiently economically developed and should no longer benefit from preferential market access to the United States market.” With respect to India, USTR concluded that the country failed to provide “equitable and reasonable access to its markets in numerous sectors.” India is the largest single beneficiary of the GSP program, with GSP-eligible imports worth $5-6 billion.
The Indian GSP eligibility determination was the result of a review of India’s GSP eligibility initiated in April 2018. Six months earlier, USTR announced new enforcement measures for GSP, including a triennial review process for each beneficiary country examining that country’s compliance with the 15 eligibility criteria established by Congress. One of those criteria is that the GSP beneficiary country must provide the United States with equitable and reasonable market access. In its latest pronouncement, USTR explained that “intensive” discussions with India regarding its trade barriers, particularly in the dairy and medical device industries, had been unsuccessful. In a statement from the Ministry of Commerce and Industry on Tuesday, India rejected the United States’ characterization of the negotiations, claiming that it was “agreeable to a very meaningful, mutual acceptable package.”
Monday’s notice to Congress marks the beginning of a 60-day waiting period before duty-free treatment of the GSP-eligible imports from Turkey and India will end.