Global Economy

India & US delink trade deal from Donald Trump's visit, eye FTA


New Delhi: India and the US have delinked the much-anticipated bilateral trade deal from the upcoming visit of President Donald Trump, while affirming to continue talks with the larger purpose of eventually moving toward a free trade agreement (FTA). “We can have a trade deal with India, but I am really saving the big trade deal for later on. We are doing a big trade deal with India. We will have it. I don’t know whether we will have it before the election, but we will have a very big deal with India,” Trump said in Washington.

Hours later, senior government officials in Delhi sought to convey a similar message. They indicated that more deliberations were needed for a deal, while pointing toward the larger ambition of having an FTA.

US trade representative Robert Lighthizer, who had called off an earlier visit to India, is still a part of the delegation accompanying Trump, along with commerce secretary Wilbur Ross. The list, however, is not final and is expected to change.

The Indo-US partnership had matured beyond being tied down to a ‘big-ticket item’ ahead of a summit meeting, said government officials. “The absence of a trade pact has not dented the mutual enthusiasm to expand trade,” they said.

Foreign secretary Harsh Shringla said bilateral trade is growing, and would cross the $150-billion mark this year.

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‘No Dead-End for Talks’

“The US is India’s largest trading partner in goods and services combined. Bilateral trade grew at over 10% per annum over the past two years to reach $142 billion in 2018. It is expected to cross $150 billion this year. The US is now also our sixth-largest source of crude oil imports, with inbound hydrocarbon shipments rising to $7 billion in the past two years,” Shringla said.

The proposed FTA could find mention in the joint statement after talks in New Delhi, though it is still a work in process. “Both sides have agreed that they will continue to engage not only on the trade deal, but a larger FTA. This trade deal will be on the most favoured nation (MFN) basis, but an FTA will be bilateral,” officials said.

Denying that trade talks have reached a dead-end on any issue, officials said an issue of high priority for India is the restoration of Generalized System of Preferences (GSP), which had been withdrawn by the US last year.

“The withdrawal of GSP has not had the imagined impact as we have increased trade by 10% during the period. But it is a priority, and we are also looking at market access in other areas,” they added.

On repeated remarks from the US side over high tariff barriers, government officials said India is a developing nation and the current regime is in line with other comparable countries. “We are not higher than other developing countries. Even nations such as South Korea and Japan have higher tariffs in many areas than us,” officials said.

Sources said trade will become more balanced within two years with increased sourcing of oil and gas from the US, and the purchase of a large number of civilian aircraft.

“We want to diversify our sources of oil and gas, and we want to become partners and stakeholders in the oil and gas industry in the US. Much of this is driven by the private sector,” the sources said.





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