India and the US resumed Bilateral Trade Agreement talks in New Delhi, showing rare flexibility despite Donald Trump’s fresh tariff threat on rice and long-pending issues.
Donald Trump announces Tariff rates. (File Image)
The two-day delegation-level talks between the US and India began Wednesday in New Delhi. The negotiators will focus on reaching a consensus on the market access and the tariffs to be imposed on each of the products. Despite US President Donald Trump’s threat of imposing a fresh tariff of 5% on rice, the talks are being held in a friendly atmosphere with both sides making significant climbdowns on many thorny issues. It can be gauged by the fact that the US Trade Representative Jamieson Greer told lawmakers in Washington that India had made “the best we’ve ever received as a country” in ongoing discussions. Appearing before a Senate Appropriations subcommittee a day before, Greer said that India had shown willingness to open up. He said, “They’ve been quite forward-leaning.”
India–US trade talks
It is a positive development as Deputy US Trade Representative (USTR) Rick Switzer and the chief negotiator for the India deal, Brendan Lynch, are holding talks with their Indian counterparts with an open mind and a desire to settle as many issues as possible in the first tranche of the talks. The talks for the Bilateral Trade Agreement (BTA) have so many thorny and apparently insurmountable issues to resolve that the two sides were extremely cautious in their approach and remained tight-lipped for most of the time since the collapse of the previous talks.
(Foreign Secretary Vikram Misri and US Under Secretary Allison Hooker hold talks in New Delhi.)
Bilateral Trade Agreement
However, the trade dynamics have changed drastically since the first round of talks held in February. The Donald Trump administration has come under pressure after being accused of alienating a dependable and close associate who can help the country on geopolitical and defence-related issues, besides the trade issues. On the other hand, India got a shock on the trade front as its exports to the US came down from $6.86 billion in August to $6.30 billion in October. New Delhi took important steps to reduce the trade surplus with the US by importing crude oil and other items. The imports soared from $3.6 billion in August to $4.84 billion in October. The trade gap came down to $1.45 billion in October from $3.17 billion in April. India also bought around 2.2 million tonnes per annum (MTPA) of LPG. As 60% of the LPG requirement is met through imports, India has been purchasing it from countries like Saudi Arabia, the United Arab Emirates, Qatar, and Kuwait.
India-US market access
Experts admit that the BTA talks can not be concluded in one round and it may need more rounds to complete it to the satisfaction of both sides. However, certain fundamental issues may be sorted out now and the nitty-gritties can be decided later after holding the hard-bargaining rounds. Indian products are under the burden of 50% of US tariffs, becoming uncompetitive. India should focus on getting the punitive secondary tariffs of 25% waived. Afterwards, it can discuss the basic tariffs. Earlier, India offered a zero per cent tariff on all goods from both countries. However, analysts believe, India should be happy if it gets the average basic tariffs reduced to 15% from the present 25%.
Experts believe India may have to give many concessions to Washington to achieve this level. First, it will come under the US pressure for opening the farm sector, an anathema for India. The farmers are already unhappy, the number of farmers committing suicide due to economic woes is increasing, the return on investment in cultivation is falling, and the agricultural sector is struggling. No government in India can open the farm sector drastically, allowing massive imports, which may further push down the prices and shrink the profit margin.
India-US tariff negotiations
What India can do to maximize the satisfaction of the US is to allow certain products. Analysts believe India can allow the imports of soybeans, soybean oil, canola oil, meat and dairy products, certain fruits and certain processed and packaged food items. However, there is no possibility of allowing the genetically modified (GM) food, cotton, wheat and maize. Though India is diversifying its fuel sector by putting more emphasis on ethanol blending, which may encourage cultivation or imports of maize and wheat, the government may find it difficult to sell the idea to farmers.
Donald Trump’s tariff threat
The two-day talks will be wrapped up on Thursday, with the framework on at least some of the issues decided. However, it will depend much on the approach of the two sides. Donald Trump has a policy of putting pressure on the other side and launching assaults to get his demands accepted. After imposing the punitive tariffs for buying Russian oil, he threatened to impose an additional tariff on its rice. He accused Delhi of dumping its rice in the US market and pushing down the prices despite the fact that Washington is a net exporter of this commodity. It is believed that he made this threat hours before the arrival of the delegation in India to send a strong signal of his hard stance. Such a threat may derail the talks.
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: dnaindia.com
