When India and the US talk trade
The good news is that there is intent to integrate both economies; the story of India-US trade remains one of untapped potential, but a bilateral deal is distant
When commerce minister Piyush Goyal met his American counterpart, the United States Trade Representative (USTR) Katherine Tai, the recent past would have heavily weighed on both. The US has turned more suspicious of free trade — with a firmly entrenched narrative back home, which has outlasted Donald Trump, that trade has cost jobs. The Joe Biden administration has limited political capital to challenge the American Right and Left’s scepticism of trade, and has shifted focus to what it calls a “worker centred” trade policy. India has stayed away from a key regional trade pact, embraced the idea of self-reliance, and adopted a set of protectionist measures. But the government recognises that progress on bilateral trade ties with a set of valued partners is necessary for both economic and strategic reasons. Then, there is what can be a called a twin bilateral paradox. The first is that while the defence and security relationship has deepened, even signing a mini-trade deal has been difficult. The second is that even in the absence of a trade deal, trade figures are fairly robust and have bounced back smartly this year.
There are also different expectations. Key American businesses, in a note to Ms Tai, focused on what they see as the absence of a strong intellectual property protection mechanism, price controls on medical devices, tariff, non-tariff and technical barriers, and digital protectionism in India. Add to this the perennial US demand for greater market access in agriculture, and the integration of labour and environmental issues with trade. India seeks restoration of benefits under the Generalised System of Preferences, a lighter US regulatory touch rather than stringent technical requirements that almost act as non-tariff barriers and greater market access for products where it had an advantage. Delhi also wants greater mobility of labour and a totalisation agreement — which the US wants to keep outside the trade basket.
It is in this backdrop that the Goyal-Tai trade talks must be judged. The good news is that there is political intent to integrate both economies further, the Trade Policy Forum has been reactivated after four years, there is incremental progress in terms of market access for some products, new areas of cooperation are being identified, and working groups will meet on contentious issues. But the larger message is that the story of India-US trade remains one of untapped potential, and a bilateral deal is distant.
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