Last night, President Trump signed a presidential proclamation terminating GSP for Turkey. The decision took effect immediately (May 17), following the March 4 notification of intent to terminate after at least 60 days. That 60-day minimum period ends on May 4.
“We know who this will hurt – small but growing American businesses that depend on GSP to remain competitive,” said Dan Anthony, Executive Director of the Coalition for GSP. “This action will raise tens of millions of dollars in taxes annually, including for many products that are not available in the United States.”
A recent report based on a survey over about 125 importers – How GSP Termination would Hurt American Businesses & Workers – profiled numerous companies importing under GSP from Turkey. For example:
World Confections, Inc. in Maplewood, New Jersey has been family owned and operated for three generations since it was established in 1952 and imports confections from Turkey under GSP. According to Vice President Scott Cohen: “There is a chance that our company will go out of business without the support of GSP benefits. Without the ability to competitively purchase from our GSP supplier, imports would decrease, job creation would halt, and worker pay would stagnate. It is dire for our company that Turkey retain GSP benefits.”
Green Boy Group in Redondo Beach, California is a start-up supplying non-GMO and organic food ingredients, primarily to specialty food manufacturers in the Los Angeles area. Most of its imports are not available in the United States. It has invested significant amounts of money to develop suppliers in Turkey, some of which become non-competitive immediately without GSP, meaning there is no way for Green Boy Group to recoup those costs.
Karran USA in Vincennes, Indiana is an 18-employee company that designs and develops kitchen sinks. In 2018 it hired two new warehouse staff and one new marketing person at its 200,000 square foot sales, manufacturing, and distribution center in central Indiana – and planned more hires for 2019. Loss of GSP for Turkey will raise prices, reduce sales, and likely put at least some of those plans on hold.
Power & Energy Usa Inc. in Doral, Florida grew its sales of GSP-eligible batteries from Turkey by more than 10% in 2018, allowing it to hire new workers while simultaneously exporting more throughout the Americas. In the ultra competitive battery market, losing the 3.5% duty preference will affect its revenues and future growth potential.
Kishek International in Costa Mesa, California imports fine gold jewelry, mostly from Turkey. GSP led to 7-figure tariff savings for the 7-person company in 2018. Kishek invested GSP savings in a new manufacturing facility to increase future US production and hired a new accountant. But domestic manufacturing depends on obtaining duty-free materials under GSP. Instead of making more jewelry in the United States with materials imported duty-free, Kishek may be forced to relocate all production overseas.
Kervan USA in Whitehall, Pennsylvania is an 8-person company that saved hundreds of thousands of dollars due to GSP for Turkey on gummy candies of well-known US brands and licensed characters (e.g., Crayola, Sunkist, Curious George, Peanuts Snoopy). While the candies are from Turkey, Kervan is promoting – and adding value to – these US brands. Growth has been strong enough that Kervan was considering opening its own warehouse that would provide jobs for 10+ people, but that will be on hold without GSP.
If there was a silver lining to the announcement, it was that no action was taken against India at this time. On May 2, a bipartisan group of 25 House Members wrote to USTR Robert Lighthizer asking for such a delay for India. While there have been press reports that USTR would not take action before India’s elections, moving ahead on only Turkey is the clearest sign yet that the Trump administration will continue negotiations with India.