Under the Trump administration, US-India tensions have increased over
each side’s tariff policies, a Congressional report has said, noting that the
two sides have also held concerted negotiations to address these trade
frictions.
The bipartisan Congressional Research Service (CRS), in its latest report,
pointed out that India’s recent tariff hikes on cell phones and other
telecommunication goods went up from zero per cent to 15-20 per cent in
the last few years.
“Under the Trump administration, bilateral tensions increased over each
side’s tariff policies. In general, India has relatively high average tariff rates,
especially in agriculture. It can raise its applied rates to bound rates without
violating its commitments under the WTO (World Trade Organization), causing uncertainty for US exporters,” said the CRS report, which is
prepared for the members of Congress ahead of trade decisions.
The United States and several other countries have requested to join various
WTO dispute consultations against India, related to its technology tariffs,
also questioning its compliance with the WTO Information Technology
Agreement (ITA).
“India opposes the 25 per cent steel and 10 per cent aluminum national
security-based ‘Section 232’ tariffs that the Trump Administration imposed
in 2018. India repeatedly delayed applying planned retaliatory tariffs
against the United States in hopes of resolving the issues bilaterally,” it said.
After India lost its eligibility for the US Trade Preference Program, India
imposed higher tariffs of 10 per cent to 25 per cent, affecting about USD 1.32
billion of US exports, such as nuts, apples, chemicals, and steel, the report
stated, adding that the two sides are challenging each other’s tariffs in the
WTO.
“Under the Trump administration, the United States and India held
concerted negotiations to address trade frictions. A potential trade deal
could include partial restoration by the United States of India’s GSP
(Generalised System of Preference) benefits in exchange for certain market
access commitments according to press accounts,” CRS said.Yet, the long
expected limited trade deal has not materialised to date, the report said.
Negotiations under prior administrations on a Bilateral Investment Treaty
(BIT) are stalled due to differences on approaches on investor protection.
On the government-to-government trade policy, the CRS listed a set of key
issues. Main among them was what aspects of bilateral trade relations would
change or remain the same under a President-elect Joe Biden-led
administration.
President Donald Trump, a Republican, is set to be succeeded by Biden, a
Democrat on January 20 after he won the November 3 presidential election.
Other key issues were, what trade issues should the United States and India
prioritise in future talks, the potential for broader trade agreement
negotiations, will India and the United States renegotiate entry into the
Regional
Comprehensive Economic Partnership (RCEP) and Comprehensive and
Progressive Agreement for Trans-Pacific Partnership (CPTPP), or
potentially seek other ways to engage on regional issues, and are there
opportunities for the United States and India to bridge differences on
multilateral trade issues.
Noting that India and the US have signed defense contracts worth more
than USD 20 billion since 2008, up from USD 500 million in all previous
years combined, the CRS said the future big deals are the purchase of an
Integrated Air Defense Weapon System, valued at nearly USD2 billion, and
30 MQ-9B Sky Guardian drones worth more than USD 3 billion.
“India is eager for more technology-sharing and co-production initiatives,
while the United States urges more reforms in India’s defence offsets policy
and higher Foreign Direct Investment caps in its defence sector. India’s
multibillion-dollar deal to purchase the Russian-made S-400 air defense
system may trigger US sanctions on India under the Countering America’s
Adversaries Through Sanctions Act, the CRS said.
Source: The Financial Express, India Tuesday, 05 January 2021