Trump visiting India this week as trade talks fizzle
— American
WASHINGTON dairy farmers, distillers and drugmakers have been eager to break into India, the world’s seventh-biggest economy but a tough-to-penetrate colossus of 1.3 billion people.
Looks like they’ll have to wait.
Talks between the Trump administration and New Delhi, intended to forge at least a modest deal in time for President Donald Trump’s visit that begins Monday, appear to have fizzled. Barring some last-minute dramatics, a U.S.-India trade pact is months away, if not longer.
“I’m really saving the big deal for later on,” Trump said this week. “I don’t know if it will be done before the elec
tion, but we’ll have a very big deal with India.” The U.S. presidential election is Nov. 3.
For now, the failure to reach a deal may reflect not so much the differences between Trump and Indian Prime Min- ister Narendra Modi as the similarities. Both men are fierce nationalists who favor protecting their own produc- ers over opening their mar- kets to foreign competition.
“You’ve got two leaders who are looking at trade very much as a zero-sum game,” said Richard Rossow, a specialist in U.S.-India relations at the Center for Strategic and International Studies.
Long notorious for high trade barriers and a cum- bersome bureaucracy, India had for the past two or three decades been slowly reform- ing and opening its economy. Under Modi, that trend has reversed.
Regarded as a business reformer when he took office in 2014, Modi has increasingly turned protectionist, matching Trump’s “America First” example with “India First” policies of his own.
“U.S. behavior on the trade front has pushed India in the opposite direction of where we could like it to go,” Edward Alden, senior fellow at the Council on Foreign Relations, told reporters Friday.
One of Trump’s first acts was to withdraw from a 12-country Asia-Pacific free trade pact negotiated by the
Obama administration. Similarly, Modi last year abandoned another Pacific Rim trade agreement, worried that India would be overwhelmed by Chinese imports.
Modi may be even more sensitive about exposing Indian companies to foreign competition because his country is in an eco- nomic slump. The Interna- tional Monetary Fund last month scaled back its expec- tation for India’s growth this year to 5.8% from the 7% it had expected back in Octo- ber. Indian loan companies, struggling to collect on bad
debts, have reduced lending, thereby squeezing Indian consumers.
The Trump administra- tion escalated the pressure on India last year by denying some of its products prefer- ential duty-free entry to the American market. In effect,
that move raised tariffs on Indian imports.
The administration is annoyed by a deficit in the trade of goods with India
that last year reached $23.3 billion. The Office of the U.S. Trade Representative last year argued that India had failed to provide assurances
that it would give U.S. products “equitable and reason- able access” to its markets.
The thinking was that India would make concessions to regain its duty-free benefits. But India hasn’t yielded yet.
One irritant is that just as negotiators were scrambling to conclude an agreement, India this month made another lurch toward protec-
tionism. It issued an annual budget that raises import taxes on everything from cheese to shoes to toy tricycles.
The two sides have also squabbled over access to India’s dairy market. A predominately Hindu nation, India prohibits, on religious grounds, dairy imports that do not derive from cows that have been raised on vegetarian diets. The U.S. dairy industry argues that such restrictions are scientifically unnecessary and burdensome.