Cloud over trade talks as U.S. of­fi­cial puts off trip

Hopes fade for deal dur­ing Pres­i­dent Trump’s visit to In­dia

The Hindu - - FRONT PAGE - Suhasini Haidar

U.S. Trade Rep­re­sen­ta­tive (USTR) Robert Lighthizer has put off his trip to In­dia this week, at least two of­fi­cial sources said, amid signs that the In­dia-U.S. trade talks have hit a rough patch just ahead of Pres­i­dent Don­ald Trump’s visit.

Ac­cord­ing to the sources, who are aware of the ne­go­ti­a­tions, no rea­son has been given for the change of plans in the USTR’s visit that was ex­pected on Thurs­day, but that there is still a con­sid­er­able chance that he would visit as a part of Mr. Trump’s en­tourage to fi­nalise a trade pack­age or a “mini-trade deal” with his coun­ter­part, Com­merce and In­dus­try Min­is­ter Piyush Goyal, on items that the two sides have been ne­go­ti­at­ing for more than two years now.

‘Missed op­por­tu­nity’

The two chief ne­go­tia­tors have been speak­ing on the phone quite reg­u­larly, the sources added.

“If [Pres­i­dent Trump and Prime Min­is­ter Naren­dra

Modi] fail to bring even a mod­est agree­ment for­ward, it will be a missed op­por­tu­nity to make progress that can ben­e­fit both coun­tries and strengthen eco­nomic ties,” said Nisha Biswal, pres­i­dent of the U.S.-In­dia Business Council at the U.S. Cham­bers of Com­merce. She was speak­ing at an in­ter­view dur­ing a visit to In­dia this week.

How­ever, Ms. Biswal said she re­mained “op­ti­mistic” that a “limited trade deal” would be fi­nalised as part of the visit. Mr. Trump and his wife Me­la­nia are trav­el­ling to Delhi and Ahmed­abad on February 24 and 25 , and are ex­pected to visit Agra as well.

In­formed sources have said that talks thus far have brought some agree­ment on con­tentious is­sues in­clud­ing med­i­cal de­vice price caps levied by In­dia, a ra­tio­nal­i­sa­tion of tar­iffs levied by both sides, and greater mar­ket ac­cess for U.S. agri­cul­tural and dairy prod­ucts.

A full restora­tion of GSP (Gen­er­alised Sys­tem of Pref­er­ences) sta­tus ap­pears un­likely at present, given the USTR’s no­tice this week that aims to treat In­dia and a num­ber of other coun­tries as “de­vel­oped coun­tries”, cou­pled with Pres­i­dent Trump’s stric­tures against giv­ing those de­fined as de­vel­oped coun­tries any GSP as­sis­tance. In­stead, the U.S. might offer a par­tial restora­tion of GSP con­ces­sions to In­dian ex­porters, but only in sec­tors where U.S. im­porters are “de­pen­dent” on In­dian goods, the sources said.

Mul­ti­ple fac­tors

Of­fi­cials said the U.S.’s stand on GSP, as well as cer­tain pro­vi­sions in the In­dian bud­get had made the talks, that have con­tin­ued nonethe­less, more dif­fi­cult. In par­tic­u­lar, the gov­ern­ment’s new “health cess” will im­pact pric­ing for med­i­cal de­vices, and the rais­ing of tar­iffs on sev­eral items in­clud­ing elec­tric ve­hi­cle (EV) com­po­nents, dairy prod­ucts, shelled wal­nuts, ed­i­ble vegetable oils, in­fant foods, and soy prod­ucts may also be­come an is­sue, U.S. gov­ern­ment web­sites have noted.

Ac­cord­ing to Ms. Biswal, who led a del­e­ga­tion from the Wash­ing­ton-based USIBC to meet with gov­ern­ment of­fi­cials in Delhi, the big­ger com­mer­cial ex­pec­ta­tions dur­ing the visit would be in the field of de­fence, in­clud­ing a $2.4 bil­lion deal for he­li­copters and an air de­fence sys­tem, and en­ergy.

“De­spite the fact that the new bud­get did not con­tain in­creased spend­ing for de­fence, the In­dian gov­ern­ment is ex­pected to an­nounce some de­fence deals on the mar­gins of the visit,” Ms. Biswal, who was ear­lier the As­sis­tant Sec­re­tary for South and Cen­tral Asia in the Obama ad­min­is­tra­tion, said.

In­dia is also ex­pected to dis­cuss an in­crease in LNG im­ports from the U.S. dur­ing the visit. An MoU for In­dia’s gas importer Petronet to in­vest $2.5 bil­lion in U.S. com­pany Tel­lurian Inc’s LNG project, that was signed dur­ing Mr. Modi’s visit to Hous­ton, is likely to be for­malised dur­ing Mr. Trump’s visit, news agen­cies have re­ported.

The an­nounce­ment of the start of for­mal free trade agree­ment ne­go­ti­a­tions will gen­er­ate con­sid­er­able in­ter­est, but could take sev­eral years to com­plete.

The ma­jor de­fence deals in ad­vanced stages are for 24 MH-60R mul­ti­role he­li­copters for the In­dian Navy and a quick re­ac­tion air de­fence sys­tem to pro­tect Delhi.

The deal for he­li­copters, worth around $2.4bil­lion, is now await­ing fi­nal ap­proval of the Cab­i­net Com­mit­tee on Se­cu­rity (CCS). In­dia and the U.S. are also in dis­cus­sions for armed drones, six more P-8I sur­veil­lance air­craft and two Raytheon ISTAR air­craft among oth­ers.

(with in­puts from Di­nakar Peri)

Robert Lighthizer

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