U.S., India Draft Trade Pact for Unveiling in Possible Trump Visit

Date: Wednesday, January 22, 2020
Source: The Wall Street Journal

‘Mini-deal’ could ease U.S. concerns over India trade practices, restore India’s preferred trade status in U.S.

Officials in India and the U.S. are preparing a limited bilateral trade agreement that could be unveiled during a visit by President Trump to New Delhi in the coming weeks, current and former government officials in both countries said.

The pact, described by a former U.S. government official as a “mini-deal,” could ease some of the U.S.’s longstanding concerns with India’s trade and economic practices, while in return restoring India’s preferential trade status, allowing the nation to ship billions of dollars of duty-free products to the U.S.

The deal wouldn’t be comparable in scale to those the U.S. has recently negotiated with Mexico, Canada and Japan, people familiar with the discussions said. It is also unlikely to include a reduction in tariffs on either side. Senior U.S. and Indian officials have met multiple times in recent months to discuss the array of trade irritants.

The White House and India’s Ministry of External Affairs are in talks over a potential visit to New Delhi by Mr. Trump. The dates haven’t been finalized, and the visit will depend on the progress of the impeachment trial of the president in the U.S. Senate, said an official at India’s Ministry of Foreign Affairs with knowledge of the discussions. The visit would be Mr. Trump’s first to India as U.S. president. His predecessor Barack Obama visited India in 2015.

“We are working on a mutually convenient date through diplomatic channels,” the official said.

India and the U.S., despite broadening their diplomatic and military ties in the past decade, have seen trade tensions grow in recent months, with Mr. Trump speaking out against high Indian tariffs on goods such as automobiles and electronics even as he touted his close personal rapport with Indian Prime Minister Narendra Modi.

U.S. goods-and-services trade with India totaled an estimated $142.1 billion in 2018, according to data from the U.S. trade representative.

Last year, the U.S. removed India from its Generalized System of Preferences, which had enabled India to avoid tariffs on certain exports to the U.S. in the interest of promoting trade ties. The move was intended to pressure New Delhi to open the country’s markets to U.S. medical devices and dairy products.

Officials stressed that the nascent agreement hasn’t been finalized and remains in flux.

The White House and the Office of the U.S. Trade Representative didn’t respond to a request for comment.

A spokeswoman for India’s Trade Ministry declined to comment. A spokesman for Mr. Modi couldn’t immediately be reached for comment.

The U.S. wants India to lift price caps on heart stents and knee implants, and address U.S. intellectual property concerns, the people familiar with the discussions said. The U.S. also seeks greater access for its agricultural and dairy products on the Indian market. The U.S. demand that India buy more American dairy products could be complicated by concerns in India that U.S. dairy cattle are fed nonvegetarian food, according to a senior official at India’s Trade Ministry, who declined to be identified as the talks aren’t public.

Both sides have been pressing for tariff reduction, the U.S. of Indian tariffs on some electronic goods, telecom gear, mobile handsets and automobiles, and India of U.S. tariffs on steel and aluminum imports, the official at India’s Trade Ministry said.

In September, Mr. Trump showed up at an event Indian Americans put on for Mr. Modi in Houston. The negotiations over a possible trade deal slowed after Mr. Modi’s visit to the U.S., but have picked up again as planning for Mr. Trump’s trip to India has intensified, according to the senior official at India’s Trade Ministry.

There have been two rounds of meetings over the past two weeks headed by Trade Minister Piyush Goyal to work out the details of a possible deal, an Indian government official said.

 

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