NEW DELHI: India and the US on Thursday wrapped up another round of discussions on an interim trade deal, as both sides sought to bridge gaps in their respective positions. A statement issued by the government after the conclusion of the bilateral talks that began on Monday was, however, non-committal on whether India’s demand for a tariff advantage in the US market in relation to its key Asian competitors was accepted by the US side.
On Wednesday, even as the talks were on, Washington proposed additional duties of 12.5% on 44 countries, including India, under Section 301 of its Trade Act for their alleged failure to enforce a ban on forced labour.
The Ministry of Commerce and Industry said in a statement: “During the visit, the teams held constructive and positive discussions across a wide range of issues covering trade in goods, non-tariff measures, Customs and trade facilitation, economic security alignment and other areas of mutual interest.”
Apart from finalising the details of the interim trade agreement, the agenda of the talks was also to take forward negotiations under the broader Bilateral Trade Agreement (BTA).
“The engagements were marked by a spirit of cooperation and pragmatism, with both sides reaffirming their commitment to concluding a mutually beneficial agreement that strengthens bilateral trade and economic ties,” the ministry added.
The US side was led by Assistant US Trade Representative for South and Central Asia Brendan Lynch, and the Indian team was led by Additional Secretary in the Department of Commerce Darpan Jain. This was the second in-person round of talks after both sides agreed to the framework of the interim trade deal. The first meeting was held in April in Washington.
The Section 301 tariffs follow a US probe into allegations that products exported to the American market were manufactured using inputs linked to forced labour. The measure has put 60 countries on notice over the potential imposition of additional duties on selected exports.
Another Section 301 investigation is currently in progress, with the US scrutinising the trade and industrial policies of 15 major trading partners, including India. The review seeks to determine whether these policies have led to excess manufacturing capacity that distorts global markets and undermines the competitiveness of American producers.
This probe could also invite another bout of tariffs, complicating negotiations on the interim trade deal. Any deal that is reached will have to accommodate the Section 301 action that the US has initiated.
Despite the announcement of Section 301 tariffs, US Ambassador to India Sergio Gor on Wednesday said that negotiations are in the final stages and only 1% of the work remains to be completed. US Secretary of State Marco Rubio while testifying before the House Foreign Relations Committee also said that both sides are very close to getting the deal done. He also said that the deal could be reached in a few weeks as both sides want it completed.
The interim agreement is based on the framework that both countries agreed to in February. Under the framework it was agreed to bring down additional tariffs on India to 18% from 50% with India agreeing to zero duty on industrial products from the US and expressing an intention to buy $500 billion worth of goods in the next five years.
However, before the framework could be converted into a formal agreement, the US Supreme Court invalidated the country-specific reciprocal tariffs, which was the starting point of all trade deals that the US had foisted on its trade partners. After the US Supreme Court verdict, Washington had imposed 10% additional tariffs on all trade partners from February 24 under Section 122 of the Trade Act. These tariffs can only be imposed for 150 days and are expected to expire on July 24.
Before the expiry of Section 122 tariffs, the US has also opened two investigations under Section 301 of the Trade Act.
Source: The Financial Express
