BE READY FOR NEW NORMAL IN GLOBAL TRADE, SAYS PRABHU
A day before US trade officials are scheduled to discuss key issues with India, Commerce and Industry Minister Suresh Prabhu said on Monday India would require to be ready for challenges posed to the global trading mechanism, hinting at the recent protectionist measures instituted by the US.
Addressing the Annual Session 2018 of the Confederation of Indian Industry, Prabhu told India Inc that countries that had benefited the most from global trade were resorting to unilateral measures that challenged the global trade mechanism under the World Trade Organization (WTO). “We are seeing in a way a new normal emerging. The so-called certain system is being questioned, and in that context we must be ready to not only face the challenges but also convert those into an opportunity,” Prabhu said, taking a dig at the US.
US Assistant Trade Representative for South and Central Asian Affairs Mark Linscott is expected on Tuesday for a two-day meet with commerce ministry officials. “While the official agenda of the meet focuses on preparing the ground for the crucial Trade Policy Forum (TPF) meeting to be held between both countries later this year, talks cannot be complete without addressing the recent series of taxes and disputes threatened by the US against trade partners, including India,” a senior official said. India has said it is open to discussions with the US — a strategic partner — on both issues but has assured domestic industry, which is concerned at the rising tariffs in India’s largest export destination, that its interests will be protected.
Stakes high for India
For India, steel and aluminium exports to the US remain at barely 2 per cent of the outbound shipments of both products. Raw steel exports to the US stood at only $330 million and exports of finished steel products were worth $1.23 billion in 2016-17. Exports of aluminium and aluminium products stood at $350 million.
But the situation may go out of control if tariffs are raised across the board. The US consumes 30 per cent of India’s annual jewellery exports and 40 per cent of exports of shrimp and prawn. About 40 per cent of pharma exports are to the US.
Merchandise sent to the US, $42.2 billion in 2016-17, account for the highest exported by India. Bilateral trade relations between the two nations were strained on a number of occasions in March. Early in March, the Donald Trump administration announced additional levies of 25 per cent duty on steel and 10 per cent on aluminium products imported from all countries, except Canada, Mexico and Australia, before threatening ‘reciprocal taxes’ on trade with partners, including India. A week later, the US also challenged at the WTO the majority of India’s export promotion schemes that provide subsidies to a majority of exporters.