Trump terminates designation of Turkey as GSP beneficiary nation, suspense over India's status

US President Donald Trump in a proclamation Thursday terminated the designation of Turkey as a beneficiary nation under its Generalized System of Preferences (GSP) while the suspense on India continued.

GSP is the largest and oldest US trade preference programme and is designed to promote economic development by allowing duty-free entry for thousands of products from designated beneficiary countries.

The termination of Turkey, a NATO ally, becomes effective May 17. On March 4, President Trump announced that the US intends to terminate India’s designation as a beneficiary developing country under the GSP programme. The 60-day notice period ended on May 3.

There was no word either from the White House or the US Trade Representative (USTR) on the fate of India’s status as a GSP beneficiary nation.

For all practical purposes, it can come any moment now, but some unconfirmed reports said that after the recent India visit of Commerce Secretary Wilbur Ross, the Trump Administration has agreed not to take a formal decision on India’s termination from GSP at least till the ongoing elections are over.

In recent weeks, several top US lawmakers and industry representatives have written to the Trump Administration to pause their decision on it till the new government is formed after the results of the elections are declared on May 23. But there has been no word from the Trump Administration on this so far.

Trump, in the proclamation issued Thursday, said he has determined “the designation of Turkey as a beneficiary developing country is terminated, effective May 17, 2019.”

Further, the exemption for Turkey from application of the safeguard measures on CSPV products and large residential washers is removed, effective May 17, 2019, he proclaimed.

“Consistent with my determination that it is appropriate to terminate the designation of Turkey as a beneficiary developing country under the GSP, effective May 17, 2019, I have determined to remove it from the list of developing country WTO Members exempt from application of the safeguard measures on CSPV products and large residential washers,” Trump said in his proclamation.

The United States had designated Turkey as a GSP beneficiary developing country in 1975.  An increase in Gross National Income (GNI) per capita, declining poverty rates, and export diversification, by trading partner and by sector, are evidence of Turkey’s higher level of economic development, according to a USTR statement on March 4.

Under the GSP program, certain products can enter the United States duty-free if beneficiary developing countries meet the eligibility criteria established by the Congress.

GSP criteria include, among others, respecting arbitral awards in favour of United States citizens or corporations, combating child labour, respecting internationally recognized worker rights, providing adequate and effective intellectual property protection, and providing the US with equitable and reasonable market access. Countries can also be graduated from the GSP program depending on factors related to economic development.