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War is no longer just with China. Trump revoked the preferential trade deal with these countries, a measure that will cost them, could Latin America be the next?
One of President Trump's main platforms has been international trade, he has been seen in the midst of a so-called "trade war" with China, whom he blames for the ills of the US economy such as unemployment and the disappearance of the domestic industry. After an escalation in the tariffs between both countries, Trump resorted to the negotiation with China, and while it solves that subject, decided to settle accounts with India and Turkey, opening what could be a new front in the commercial war of the United States against the world.
Leer en español: Trump: se avecina una guerra comercial con India y Turquía
Before Donald Trump, the United States had a preferential trade agreement with both India and Turkey, through which some products from both countries could enter the United States duty-free. These agreements are part of the Generalized System of Preferences (GSP), a program of the US government to stimulate trade with developing countries. To enter the program, the country in question must meet the criteria established by the Congress of the United States and, having done so, may be included in the list of 129 countries exempt from tariffs for 4,800 products.
India is the biggest beneficiary of this program, according to the BBC, $5.6 billion dollars of Indian merchandise enter the United States without tariff restrictions every year.
"I have determined that India does not guarantee the United States equitable and reasonable access to its markets, "Trump said in a letter to Congress announcing his decision.
Regarding the case of Turkey, which would also be removed from the GSP program, the US government argues that it no longer meets the criteria to remain eligible, since it is already 'sufficiently developed economically,' according to the same statement.
Two different cases
Trump's rationale to revoke India from the GSP program largely follows the same lines of his dispute with China. Trump believes that the commercial behavior of India, with low wages and a relatively technified industry, makes it more attractive to industrial capital than the United States, taking away its participation in the international market.
Additionally, while many products from India arrive in the United States free of tariffs, products from the United States do have to pay for their products when they reach Indian soil.
Monideepa M. Mukherjee, who spoke on behalf of the Indian Ministry of Commerce, assured that India would accept the measures, which would ultimately have "a minimum impact of $190 million for India".
If the figure is correct, leaving the GSP would not mean much for India, which, according to information from the US government, trades around $126,000 million dollars in goods and services with the United States each year.
Meanwhile, behind the decision of Turkey, there seem to be other motivations of a political nature. According to Bloomberg analysts, the measure to exclude it from the GSP could be part of a strategy of pressure by the United States to dissuade the Turkish government from acquiring a Russian air defense system.
This acquisition would compromise the technological infrastructure of NATO, an organization which Turkey is part of, and demonstrate the continued Russian expansion towards the Middle East, a matter of concern to the United States.
In addition, Turkey's support to Venezuela through purchases of gold, already identified by the United States, may also give reasons for this decision to deprive it of preferential trade treatment.
Could a Latin American state follow?
While neither of these two new fronts in the trade war reaches the size of the dispute with China, they do raise questions about the commercial future of the United States towards the developing states.
Earlier, some of the other protectionist measures in the United States had a serious impact on Latin America. The additional taxes on steel and aluminum introduced by the Donald Trump administration, for example, ended up doing a lot of damage to the Brazilian economy.
Many countries in the region are eligible and enjoy benefits under the GSP program, with notable absences from Chile, Mexico and the countries of Central America. Many others also have free trade agreements with the United States. Under Trump's trade agreements renegotiation policy, it should not be surprising if he start talking about reviewing the commercial relationship between Latin America and the United States.
LatinAmerican Post | Pedro Bernal
Translated from "Trump: se avecina una guerra comercial con India y Turquía"