US terminates Turkey’s preferential trade agreement, reduces tariffs on steel

A Turkish flag at the courtyard of the Grand Camlica Mosque in Istanbul, Turkey, on May 3, 2019.
A Turkish flag at the courtyard of the Grand Camlica Mosque in Istanbul, Turkey, on May 3, 2019. PHOTO: REUTERS

WASHINGTON (REUTERS) - The United States on Thursday (May 16) terminated Turkey’s preferential trade treatment that allowed some exports to enter the country duty free, but halved its tariffs on imports of Turkish steel to 25 per cent. 

The White House said it was appropriate to terminate Turkey’s eligibility to participate in the Generalised System of Preferences (GSP) programme, based on its level of economic development.

The decision is effective from Friday, it added.

The US Trade Representative (USTR) said in early March that Turkey was no longer eligible to participate because it “is sufficiently economically developed”. It had begun reviewing the Nato ally’s status in the programme last August when the two countries were embroiled in a diplomatic row. 

But Ankara had been hopeful that Washington would not go ahead with the decision, saying it would be against the US$75 billion (S$103 billion) target for mutual trade laid out by President Donald Trump and Turkish President Recep Tayyip Erdogan. 

During last year’s spat, Mr Trump had imposed higher tariffs on imports of Turkish steel and aluminium to put economic pressure on Nato member Turkey to force it to release Mr Andrew Brunson, an American pastor who was detained there over terrorism charges. Mr Brunson was released last October.

Mr Trump’s move sent the Turkish lira into a tailspin. Since then, the ties between the two countries have remained tense over disagreements ranging from Ankara’s planned purchase of a Russian missile system to diverging interests in Syria. 

In a subsequent statement on Thursday, the White House said it was reducing the 50 per cent tariff, doubled last August, to 25 per cent.

“Maintaining the existing 25 per cent tariff on most countries is necessary and appropriate at this time to address the threatened impairment of the national security,” it said. 

Turkey was one of 120 countries that participate in the GSP, the oldest and largest US trade preference programme. It aims to promote economic development in beneficiary countries and territories by eliminating duties on thousands of products. 

The US imported US$1.66 billion worth of goods in 2017 from Turkey under the GSP programme, representing 17.7 per cent of total US imports from Turkey, according to USTR’s website. 

The leading GSP import categories were vehicles and vehicle parts, jewellery and precious metals, and stone articles, the website said.