On Monday, the Administration announced their intention to terminate GSP benefits from Turkey and India. I’ve been a Customs broker long enough that with the exception of commodities like carpets, textiles and gold, importers I represented made sourcing decisions in these countries based on the fact they could buy duty-free.
Now, that trade-off came with any number of pitfalls ranging from longer supply chains, factory delays, monsoons, flooding, labor unrest and the comparative lack of service to get goods out of those emerging markets and to United States consumers.
Oh, and we can’t forget how every few years, GSP eligibility became a pawn in Congressional budget negotiations, leading advocacy organizations like GSP Today to actually have to create a lobbying apparatus to share the impact of the GSP program on a state-by-state basis.
Sixty days is hardly time for an importer to have hard conversations with factories about what changes, if any, need to be made to the pricing or to convince their customers they’ll have to pay more for the same item later this year, for no other reason than the administration wasn’t happy with the pace or tone of trade negotiations.
Trade and diplomacy are inextricably intertwined. There is no permanent Ambassador to Turkey, and I cannot imagine this news has done much to further the popularity of our Ambassador in India.
As a country, America has plenty going on right now with both countries, directly and indirectly. Turkey plays a role with our Middle East and Syria policy. India and Pakistan tensions got enflamed when a group of terrorists conducted an attack inside western India and Pakistan response by shooting down several Indian fighter aircraft.
Global realpolitik, whether it immediately impacts us at home, has consequences. The sudden upending of GSP eligibility for these two countries will have an impact with economic, security and trade relations moving forward. In the interim, I feel the pain of my custom broker clients who are telling their importers that GSP is going away again for these countries and and no, this time there’s no hint of it coming back.