Foreign Policy Watch: India-United States

Trade talks stuck as U.S. presses oil, aircraft sales to India


Note4students

Mains Paper 2: IR | Bilateral, regional & global groupings & agreements involving India &/or affecting India’s interests

From UPSC perspective, the following things are important:

Prelims level: Not Much

Mains level: The newscard talks of uncertainty of Trump administration over its strategic relation with India merely over India’s trade surplus with the US.


News

Crosshairs of Trump administration

  1. India and the United States are in a deadlock over contentious trade issues.
  2. This comes after the Trump administration sought a formal commitment of additional purchases of $10 billion annually for the next three years, as part of a trade agreement under negotiation.
  3. has a surplus of $23 billion in trade with America, and the U.S. wants to wipe that off by forcing more imports by New Delhi, as part of a proposed trade agreement.

Reviewing the GSP status for India

  1. The USTR had launched a review of India’s GSP status, which allows preferential treatment to certain number of specified goods from beneficiary countries.
  2. Earlier signals from the USTR suggested there could be a resolution by India, rationalizing the trade margin over medical devices, and for India by reducing the steel and aluminum tariffs.
  3. But the draft agreement prepared by the USTR sought concessions from India on Compulsory Registration Order that governs standards in telecom equipment, American exports of boric acid, pork, poultry and dairy.

Overt expectations by US

  1. American interlocutors took Indian officials by surprise last month with a draft agreement that committed additional imports by India, in civilian aircraft and natural gas.
  2. With talks in stalemate, the U.S is proceeding with its review of India’s GSP status and India is moving ahead with retaliatory tariffs.
  3. Postponed twice, India’s retaliatory tariffs are now set to come into force on September 18.
  4. Meanwhile, there is a shadow of uncertainty over the Trade Policy Forum (TPF) that was announced for the last week of October.
  5. India was expecting to negotiate general market access issues at the Trade Policy Forum (TPF), but the USTR wanted all of them resolved at earliest.

Fight for Market Access

  1. The US must understand that there are different ways of addressing the trade deficit.
  2. With the US restarting oil and natural gas exports Indian imports in these sectors have been going up.
  3. In the first six months of this year, US exports to India have gone up by 28% compared to last year.
  4. The US should not be hasty. There has been a decrease in the deficit last year by about 5% or about $1.5 Bn because India imports gas and oil from the United States.
  5. According to ballpark figures, this calendar year we are likely to import up to US $2.5 billion in oil and gas. This must be acknowledged by the US.
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