NEWS NATIONAL NEWS        05/03/2019

USA to preclude Turkey from preferential trade treatment

The United States Trade Representative’s (USTR) office announced on March 4th, 2019 that Turkey and India would no longer be receiving preferential trade treatment in that they would no longer be eligible to participate in the Generalised System of Preferences programme. Under this programme, specified export items can enter the USA duty free.


The USTR stated that Turkey, which has been a beneficiary of the programme since 1975, is now “sufficiently economically developed”. The agency also pointed out that "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," and had been reviewing Turkey's eligibility in the program since August following Turkey’s retaliatory tariffs on American goods in response to American tariff increases on Turkish steel and aluminium. The agency added that removing Turkey from the programme would not take effect for at least 60 days after notifications to Congress and the Turkish government, and that it will be enacted by a presidential proclamation.


Trump duly notified Congress on March 4th, writing that "In the four and a half decades since Turkey's designation as a GSP beneficiary developing country, Turkey's economy has grown and diversified," and that America "remains committed to fair and reciprocal trade with Turkey".


Turkey is one of 120 countries that participate in the GSP, the oldest and largest US trade preference programme, which aims to promote economic development in beneficiary countries by eliminating duties on a wide range of products. The USA imported USD 1.66 billion in 2017 from Turkey under the GSP program, representing 17.7% of total U.S. imports from Turkey. The leading GSP import categories were vehicles and vehicle parts, jewellery and precious metals and stones.


Turkish Trade Minister Ruhsar Pekcan was critical of the US’s intention to end its preferential tariff programme for Turkey, posting a twitter on March 5th, which said “Unfortunately, this decision conflicts with our mutual objective of reaching a bilateral trade volume of USD 75 billion, which had been announced by both governments.”  Pekcan noted that the value of total imports to the USA amounted to USD 20.9 billion under its Generalized System of Preferences (GSP) scheme in the first 11 months of 2018, and that Turkey was the fifth largest exporter under this programme to the USA with a share of 8.2% in that period, with exports amounting to USD 1.74 billion. Pekcan added that the decision would also negatively affect small and medium-sized enterprises and manufacturers in the USA, but that “We still would like to pursue our target of increasing our bilateral trade with the U.S. which we see as our strategic partner, without losing any momentum.” She also added that USD 1.7 billion worth of exports would only now cost an additional USD 63 million in tariffs.



USTR’s entry in its website regarding Turkey is as follows :




U.S. goods and services trade with Turkey totalled an estimated $22.4 billion in 2016 (latest data available). Exports were $12.4 billion; imports were $9.9 billion. The U.S. goods and services trade surplus with Turkey was $2.5 billion in 2016.


Turkey is currently our 32nd largest goods trading partner with $19.2 billion in total (two way) goods trade during 2017. Goods exports totalled $9.7 billion; goods imports totalled $9.4 billion. The U.S. goods trade surplus with Turkey was $328 million in 2017.


Trade in services with Turkey totalled an estimated $5.0 billion in 2016 (latest data available). Services exports totalled $3.1 billion; services imports totalled $1.9 billion. The U.S. services trade surplus with Turkey was $1.2 billion in 2016.


According to the Department of Commerce, U.S. exports of Goods and Services to Turkey supported an estimated 68 thousand jobs in 2015 (latest data available) (48 thousand supported by goods exports and 20 thousand supported by services exports).



+  Turkey was the United States' 28th largest goods export market in 2017.

+  U.S. goods exports to Turkey in 2017 were $9.7 billion, up 4.1% ($387 million) from 2016 and up 49.9% from 2007.  

+  The top export categories (2-digit HS) in 2017 were: aircraft ($1.8 billion), iron and steel ($1.1 billion), mineral fuels ($979 million), machinery ($760 million), and cotton ($735 million).

+  U.S. total exports of agricultural products to Turkey totalled $1.8 billion in 2017. Leading domestic export categories include: cotton ($730 million), tree nuts ($308 million), distillers grains ($229 million), soybeans ($139 million), and feeds & fodders nesoi ($51 million).

+  U.S. exports of services to Turkey were an estimated $3.1 billion in 2016 0.6% ($18 million) less than 2015.  Leading services exports from the U.S. to Turkey were in the travel, intellectual property (industrial processes), and financial services sectors. 



+  Turkey was the United States' 34th largest supplier of goods imports in 2017.

+  U.S. goods imports from Turkey totalled $9.4 billion in 2017, up 17.1% ($1.4 billion) from 2016, and up 104.6% from 2007.  

+  The top import categories (2-digit HS) in 2017 were: vehicles ($1.4 billion), iron and steel ($1.0 billion), machinery ($942 million), carpets and other textile coverings ($478 million), and stone, plaster, cement ($354 million).

+  U.S. total imports of agricultural products from Turkey totalled $938 million in 2017. Leading categories include: processed fruit & vegetables ($185 million), tobacco ($151 million), snack foods ($102 million), coarse grains ($79 million), and other vegetable oils ($73 million).

+  U.S. imports of services to Turkey were an estimated $1.9 billion in 2016 7.2% ($146 million) less than 2015.  Leading services imports from Turkey to the U.S. were in the travel, transport, and professional and management services sectors. 


Trade Balance

+  The U.S. goods trade surplus with Turkey was $328 million in 2017, a 75.1% decrease ($989 million) over 2016.

+  The United States has a services trade surplus of an estimated $1.2 billion with Turkey in 2016 (latest data available), up 16.0% from 2015. 



+  U.S. foreign direct investment (FDI) in Turkey (stock) was $4.3 billion in 2017, a 10.7% increase from 2016. U.S. direct investment in Turkey is led by manufacturing, wholesale trade, and finance and insurance.

+  Turkey's FDI in the United States (stock) was $2.0 billion in 2017, up 18.1% from 2016. There is no information on the distribution of Turkey FDI in the U.S.

+  Sales of services in Turkey by majority U.S.-owned affiliates were $5.1 billion in 2015 (latest data available), while sales of services in the United States by majority Turkey-owned firms were $75 million.”



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