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Mar 05 2019

Trump to end Turkey’s preferential trade status

U.S. President Donald Trump notified Congress on Monday of plans to end key trade preferences for Turkey, which the U.S. no longer views as a developing country.

The president's letters of his intent to terminate trade benefits for Turkey, as well as India, began a 60-day countdown before he can act, according to the U.S. Trade Representative’s Office.

Turkey’s designation as a beneficiary developing country under the Generalized System of Preferences (GSP) program allows its exports to enter the United States duty-free. The U.S. Trade Representative’s statement said the United States was terminating this designation, handed out in 1975, because Turkey no longer fit the eligibility criteria.

“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,” said the statement.

Trump said in his letter that Turkey is no longer a “developing country based on its level of economic development.”

Turkey was the fifth largest beneficiary of the program in 2017, with $1.7 billion in imports, according to a Congressional Research Service report released in January.

Annual trade between the NATO allies hovers around $20 billion. In talks last month, Trump and Turkish President Recep Tayyip Erdoğan set a total trade target of $75 billion, if the two agree to a free trade deal.

Trump could reverse his notice to terminate if Turkey satisfies his concerns, but he has had several disagreements with Erdoğan, about the conflict in Syria, trade with Iran and Venezuela, Ankara’s purchase of Russian weapons systems, and its extended detention of U.S. citizens like Andrew Brunson.

Meanwhile, Turkey’s once-strong economy has weakened considerably, a key issue in the lead up to local elections on March 31.