No zero-sum games

In­dia and the U.S. must work to halt trade hos­til­i­ties ur­gently

The Hindu - - EDITORIAL -

There are alarm bells in In­dia over a pos­si­ble de­ci­sion by the U.S. Trade Rep­re­sen­ta­tive to with­draw the Gen­er­alised Sys­tem of Pref­er­ences sta­tus. Un­der this, In­dia is able to ex­port about 2,000 prod­uct lines to the U.S. un­der zero tar­iff. The re­vo­ca­tion of the GSP, which was first ex­tended to In­dia in 1976 as part of a global con­ces­sion by the U.S. to help de­vel­op­ing coun­tries build their economies, will be a blow to In­dian ex­porters, and the big­gest in a series of mea­sures taken by the Trump ad­min­is­tra­tion against In­dia to re­duce its trade deficit. Pres­i­dent Don­ald Trump’s case on what he calls “un­equal tar­iffs” from In­dia rests on the trade re­la­tion­ship in favour of In­dia: In­dian ex­ports to the U.S. in 2017-18 stood at $47.9 bil­lion, while im­ports were $26.7 bil­lion. The mea­sures are in line with Mr. Trump’s cam­paign prom­ises. On the mat­ter of Har­ley-David­son mo­tor­cy­cles, he spoke di­rectly to Prime Min­is­ter Naren­dra Modi on at least three oc­ca­sions, de­mand­ing that In­dia zero out tar­iffs to match U.S. rates on In­dian mo­tor­cy­cles. In March 2018, the U.S. be­gan im­pos­ing tar­iffs on sev­eral In­dian prod­ucts, and in April, the USTR be­gan a re­view of In­dia’s GSP sta­tus, based on com­plaints of trade bar­ri­ers from In­dia it had re­ceived from the dairy in­dus­try and man­u­fac­tur­ers of med­i­cal de­vices. In Novem­ber the U.S. with­drew GSP sta­tus on at least 50 In­dian prod­ucts. In re­tal­i­a­tion, In­dia pro­posed tar­iffs of about $235 mil­lion on 29 Amer­i­can goods, but has put off im­ple­ment­ing these five times in the past year in the hope that a ne­go­ti­ated trade set­tle­ment will come through. The lat­est dead­line ex­pires on March 1. In­dia has also at­tempted to ad­dress the trade deficit with pur­chase of Amer­i­can oil, en­ergy and air­craft. There have been dozens of rounds of talks be­tween of­fi­cials over the past few months, but no break­through. U.S. of­fi­cials say the de­ci­sion on data lo­cal­i­sa­tion for all com­pa­nies op­er­at­ing in In­dia, and the more re­cent tight­en­ing norms for FDI in e-com­merce have ag­gra­vated the sit­u­a­tion. Both sides should work to­wards call­ing a halt to trade hos­til­i­ties and speed up ef­forts for a com­pre­hen­sive trade “pack­age”, rather than try to match each con­cern prod­uct by prod­uct. The U.S. must re­alise that In­dia is head­ing into elec­tions, and of­fer more flex­i­bil­ity in the next few months. In­dia must keep in mind that the larger, global pic­ture is about U.S.-China trade is­sues, and if a trade deal with the U.S. is reached, In­dia could be the big­gest ben­e­fi­ciary of busi­ness deals lost by China. The visit of U.S. Com­merce Sec­re­tary Wil­bur Ross to In­dia this week will be watched not as much for sub­stance, as for sig­nals that New Delhi and Washington un­der­stand the ur­gency in break­ing the dead­lock.

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