WASHINGTON, DC - JUNE 26: U.S. President Donald Tr
U.S. President Donald Trump and Indian Prime Minister Narendra Modi embrace while delivering joint statements in the Rose Garden of the White House in Washington, DC. Photo by Mark Wilson/Getty Images

  • The Trump administration is ending a key trade agreement with both India and Turkey, with the US accusing India of erecting unnecessary barriers to trade.
  • Two nations will be removed from the US' Generalised System of Preferences (GSP), which allows certain goods to enjoy duty-free entry into the US.
  • Trump's punitive actions against India and Turkey come just as he and his administration take a more conciliatory approach to negotiations with China over trade.

The Trump administration is ending a key trade agreement with India after accusing the country's government of erecting unnecessary barriers to trade between the two nations.

Around R79 billion worth of Indian goods currently enjoys duty-free entry into the US under an agreement known as a Generalised System of Preferences (GSP).

The agreement effectively exempts India, and many other nations, from tariffs on certain goods exported to the US. India is by far the biggest beneficiary of the US' GSP, which has been in place in some form since the mid-1970s.

Other countries to benefit include Brazil, Indonesia, and Thailand, with around R269 billion of goods coming to the US under the exemptions each year, according to recent data.

Since becoming president, however, Donald Trump, has frequently criticised India for its high tariffs on US imports, and has now taken the step of giving India notice of its removal from the GSP.

India has a "wide array of trade barriers that create serious negative effects on United States commerce," an announcement from the US Trade Representative's office said.

In a separate letter to congressional leaders, Trump set out his reasons for kicking India out of the GSP, saying:

"I am taking this step because, after intensive engagement between the United States and the government of India, I have determined that India has not assured the United States that it will provide equitable and reasonable access to the markets of India."

India's removal from the GSP will not be immediate, however, with trade officials saying that it will take 60 days from the point at which India's government, and US Congress, are formally notified of the action.

India's government said it has no plans to retaliate against the US' actions, saying that there is little real benefit to the country in monetary terms from the GSP.

"India exports goods worth R79 billion under the GSP, and the duty benefit is only R269 million annually," India's commerce secretary Anup Wadhawan said, according to the Hindustan Times.

Separately, the US government also notified Turkey that it will be removed from the GSP, with the administration citing the rapid growth of the Turkish economy since it was first admitted to the program as the main reason.

"In the four-and-a-half decades since Turkey's designation as a GSP beneficiary developing country, Turkey's economy has grown and diversified," the president said, adding that the country is now "sufficiently economically developed" so as not to need beneficial access to US markets.

The letter also noted that Turkey has already had support removed from similar programmes put in place by other developed nations.

Trump's punitive actions against India and Turkey come just as he and his administration take a more conciliatory approach to negotiations with China over trade.

It has been reported this week that Washington is set to remove "most, if not all," sanctions on Chinese products, in return for Beijing trimming tariffs and other restrictions including on US farm, chemical, and auto products.

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