The India US trade imbroglio doesn’t seem to be resolved any time soon.
The Background
Following the Trump Modi summit in Japan, the trade officials of the two countries have met to iron out the differences and a second-round happened.
When Assistant USTR Chris Wilson & deputy assistant USTR Brendan Lynch came to New Delhi for talks last week.
India’s Minister of Commerce Piyush Goyal is scheduled to be in Washington to meet with the USTR to overcome ways to end the crisis and the difference.
This follows the Modi Trump meeting which was dominated by the trade issues.
The Japan Meeting
Here is what happened at the meeting which helped diffused the tensions, but didn’t lead to any standoff.
The meeting lasted about 45 minutes.
Trump said why did India increase tariffs on so many US goods. Modi responded that India’s tariff was a reaction of the US move.
Why didn’t you tell me you can call me any time Trump said
“Modi told Trump that the timing of the tarrifs were ‘Not good’ major country whose goods trade surplus with the US narrowed in 2017 — a fact New Delhi has recently highlighted in its talks with Washington.
Indian officials believe that Trump May push for a free trade agreement when the two leaders meet in September.
India’s commerce Minister Piyush Goyal will be in the US with a package to assuage US concerns in exchange for US’s climb down.
It can not be one way NYC style street one Indian official remarked.
What happened at the Delhi talks
The US sought the rollback of Indian tariffs imposed on some agricultural products, such as almonds, when the two sides met.
Those tariffs were imposed in response to the Trump administration’s decision to remove trade privileges from Indian products under the Generalized System of Preferences. India has asked for those privileges, effectively zero tariffs on a range of Indian products entering the United States, to be reinstated.
From the Indian side, talks were led by Sanjay Chaddha, an IAS officer posted in India’s commerce ministry.
During the talks, India did not commit to any changes to foreign investment rules for foreign e-commerce firms such as Walmart’s Flipkart and Amazon, one of the Indian sources said. The rules have forced the two American companies to rework their business strategies for India.
Diplomatic sources say that Trump has been pressing US officials to get tarrif reduced by India especially on Almonds and the agricultural commodities owing to the election lobbies rolling out his campaign.
Behind the scenes
While tariffs on a number of products such as smartphones, other IT and telecom items and Harley Davidson motorbikes are one of the focus issues for the US for the talks, the other two are e-commerce rules and data localisation.
The US team told Indian officials that data localisation requirements in India would serve as significant barriers to digital trade between the two countries and should be removed. The report also said that India’s draft national e-commerce policy, which also advocates putting restrictions on cross-border data management.
The strategic insights
The view in New Delhi
Officials in New Delhi are upset a Trump’s tweet just ahead of the delegation’s visit.
However privately they have been told that was aimed at seeking concessions from India.
However, the pressure tactics will backfire given the nationalist stand of the MODI government
Foreign Minister S Jaishankar who is a close advocate of the Indo US trade relations has told Commerce Minister Piyush Goyal that these statements should be seen in the larger context of Trump’s grand plans.
And that India and the US had a much wider canvas of cooperation.
While the Commerce Ministry in India wants to go tough on the tit for tat measures against the US, the MEA wants a more balanced outlook given the larger Indo US relationship.
However, the trade issue has become a prickly one in the canvas of Indo US relations.