NEW DELHI: As the last round of negotiators on an India-US interim trade agreement was under way in Washington, president Donald Trump said on Friday that a “big deal” was coming up and that would open up Indian markets for American goods. “Everybody wants to make a deal and have a part of it… we just signed with China yesterday. We are having some great deals. We have one coming up, maybe with India. That is a big one. We are going to open up India,” Trump said at a White House event.
His comments came even as the Indian team led by chief negotiator for the Bilateral Trade Agreement (BTA) special secretary Rajesh Agrawal was holding meetings with the US side led by US Assistant United States Trade Representative (USTR). The two-days of engagements was to end on Friday. Both sides are aiming for “some kind of an agreement” before the three-month pause on reciprocal tariffs ends on July 9. even though the White House spokesperson has hinted that the deadline could be extended.
The US signed a deal with China on Wednesday. While details have not been made public, it has been said that it would allow export of rare earths from China while the US would reduce its restrictions on Chinese imports.
The US has been quite vocal on high tariffs by India on automobiles and agriculture products apart from other barriers to trade while demanding greater access through lower duties. India has protected agriculture and dairy products in all its trade agreements and Indian officials have said that they are not desperate for a deal and national interests would be protected.
The farm products where the US is seeking lower duties include ethanol, almonds, walnuts, apples, raisins, avocados, olive oil, spirits, and wine.
The US is also seeking markets for its genetically modified food products. India on its parts has not allowed cultivation and sale of any food crops domestically despite pressure from multinationals involved in their promotion.
Apart from agriculture, the US is seeking greater opening up of the Indian markets for its services and digital companies. India’s interest is in getting lower duties on its labour intensive items of exports like textiles and leather. India also has an interest in keeping the US market open for emerging areas of exports like electronics and smartphones, auto and auto parts and engineering goods. In electronics Trump has said that Apple and other companies will have to pay 25% tariffs if they manufacture smartphones outside the US. These tariffs are yet to be imposed. Even in pharma – which is a major Indian export to the US – Trump has talked of increasing import duties.
The discussions between India and US are also focussing on reducing sector specific tariffs on steel, aluminium and auto parts. On steel and aluminium Trump has imposed 50% duties.
Even though India may avoid full implementation of reciprocal tariffs with the trade deal, the 10% baseline tariffs on its exports are likely to stay as the US did in its agreement with the UK. In the only agreement that the US has signed after the reciprocal tariffs, 10% baseline tariffs stay on UK’s exports to US but tariffs on steel and aluminium have been removed.
An earlier deal between US and China that was agreed in Geneva had faltered with both sides holding the other responsible for the breach of the agreement. The president also said that the US would not be signing trade agreements with all companies and in fact impose duties on their imports ranging from 25% to 45%.
Source: The Financial Express
