Trade associations for the Indian and Turkish apparel sectors appear unmoved by the US’ threats to pull access to a trade preference scheme that allows them to send certain goods, including apparel, to the country duty-free.
US President Donald Trump announced plans to terminate the eligibility of India and Turkey as beneficiary developing countries under the Generalized System of Preferences (GSP) earlier this week.
These changes will not take effect until at least 3 May and will be enacted by a presidential proclamation, according to international trade law firm Sandler, Travis & Rosenberg. Once that proclamation takes effect, thousands of products imported from these two countries will no longer be eligible for duty-free treatment under GSP.
The President said India is being terminated from GSP because it has not assured the US that it will provide equitable and reasonable access to its markets. A note from the Office of the US Trade Representative (USTR) explains that India has implemented a wide array of trade barriers that “create serious negative effects on US commerce.”
Turkey, meanwhile, is being terminated based on its level of economic development, the President said, pointing to Turkey’s increases in gross national product per capita, declining poverty rates, and export diversification since being named a GSP beneficiary in 1975.
But apparel trade bodies from both countries have said the impact on the industry from the loss of the benefit would be “minimal”.
The Istanbul Textile and Apparel Exporters’ Association (IHKIB) said: “Our country is included in the GSP programme in 1975, the last time the per capita national income of Turkey’s people, when the examination of indicators such as diversification in decreasing poverty and exports reached enough level of economic development and in this context it is stated that it does not need preferential market access conditions in the US market.”
Speaking specifically about apparel, IHKIB said the products included in the US GTS programme are “quite limited”.
Meanwhile, a spokesperson for the Apparel Export Promotion Council in India told just-style the GSP benefit extended to India on apparel items is “not very significant”. Overall, the 15 RMG categories that India exports to the US only contributes to 0.46% of India’s total apparel exports.
The biggest impact would be to the women’s or girls’ dresses, of which the US imported US$10.52m from India in 2017.
However, the spokesperson said the US is India’s “most important partner in apparel” and noted any adverse action on trade relations “has a serious impact on trade”.
“Removal of India from US GSP beneficiary would erode the trade of US$17m. The product cost for the buyer will increase by almost 7%, given the fact that China is our main competitor in these categories, India would not be able to match the cost. With the loss of trade, proportionate loss of employment is also expected as these products are manufactured by SMEs.”
