New Delhi: India and the US have a strong strategic and defence partnership and robust trading relationship valued at over $142 billion today. But long-standing disputes remain including on immigration and a proposed trade deal – a limited one has remained elusive for very long now and could not be inked even during President Trump’s India visit in February 2020.
However, at a recent annual conference organised by USISPF (US India Strategic Partnership Forum), Commerce and Industry Minister Piyush Goyal announced that a limited trade deal may possibly be signed before the November presidential polls.
Asked about the possibility of the limited trade deal, Dr Aparna Pande, Director of India Initiative at the Hudson Institute in Washington DC said that it is highly unlikely.
“I am not sure a trade deal mini or minor will be signed in the coming months. What is possible is that the US could give back India the GSP (Generalized System of Preferences) plus. The privileges that were taken away. That would be about 6 to 8 billion USD. That is something which an executive order had taken away and the President can do that in the coming month or two. And it would seem like a mini deal”, said Dr Pande who has authored From Chanakya To Modi and Making India Great.
“Problem with a bigger trade deal is we live in a time when both India and the US are nationalist and protectionist. It is very difficult to align America First policy with giving privileges to a country that you have called tariff king and against whom you have a number of issues from agricultural subsidies to Intellectual Property Rights to other duties. So it is difficult for the American President to do it in the next two months. Will it happen in the next administration whether it is Biden or Trump, I do not know. It is difficult as well on India’s side. The Indian economy has suffered. For India some of the tariffs and duties are important to protect its own farmers and manufacturers,” she explained further.
Former Indian Ambassador to France and trade negotiator Mohan Kumar echoing similar doubts said that a trade agreement is unlikely before the first quarter of 2021. He also flagged complicated issues on the table which are of greater concern for India.
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“The most important issue is now the US lumping us with China and saying we are both not entitled to be developing countries. That is a shocking argument for a former negotiator like me. You are comparing apples and oranges. Everyone knows China is a 13 trillion USD economy while we are a 2.7 trillion USD economy. That is something on which we need to impress the next administration, whichever that might be, to tell them,” said Mohan Kumar who is also the Chairman of think tank RIS and Dean of International Studies at the Jindal Global University.
“For me because of the impending multilateral negotiations on fisheries we simply have to get that developing countries status back. We cannot afford to negotiate in the WTO if the US says we are going to treat you like China or anybody else. Everything else I believe we can sort it out but this is extremely critical on which I do not see Lighthizer (US Trade Representative) relenting at all,” said Kumar pointing to the digital services tax as another complication along with GSP.
“The United States has taken a position vis-à-vis France where they are trying to impose punitive tariffs in response to France’s imposition of digital services tax. We have already done that. We call it an equivalent duty or something. We have tried hard to explain to the US that it is not aimed at Google or Amazon. So I think it will be quarter of next year,” he added.
The conversation discussed if a Joe Biden administration would cooperate with India more on priorities of energy, trade and immigration compared to a transactional Trump. It also looked at the pitfalls or opportunities for India if the US-China trade decoupling were to happen at a faster pace post-November depending on the new White House incumbent.
“If President Trump returns to power, it will be the last four years in power since he cannot become President again. So he will adopt one of two – most likely one policy- Which is he will continue to do things which he is scared about since the 1980s or 1990s. Immigration matters to him. As of now what he has done is mostly Executive Orders because it is the Congress which can implement the immigration reforms, not the Executive in the US. But he will try to undertake more policies to restrict immigration whether it is H1B or L1, green cards or even student visas. And that is going to hit India. Not just because Indians come here to study. But because the remittances will be hit. And the relationship we have tried to build over the years,” argued Dr.Pande.
She underlined that at the end of the day Delhi and DC need to take a political stance as to why is it that the economic side is so far behind the strategic dimension. Mohan Kumar believes that highly skilled immigration will find favour with the Biden administration but there are pros and cons.
“If the Biden administration comes to power then we have different kinds of issues. There may be a chance that WTO gets revived. And then we try and have a kind of alliance-either a group of countries or bilaterally and tell them that we will sit with you, we will do business but do not do this. Do not take away special differential treatment, don’t take away GSP. But there will be other issues. For example, I see them being much tougher when it comes to labour standards, environmental standards and they will include all those into WTO. The Democrats have traditionally been attached to the use of trade to prosecute environmental and labour standards,” said the retired diplomat.
