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India, U.S. trade deal falls through (Relevant for GS Prelims & Mains Paper III; Economics)

Despite Commerce Minister Piyush Goyal’s presence in New York to conclude a trade package with U.S. Trade Representative (USTR) Robert Lighthizer, the two sides failed to bridge the gap in their positions. The announcement of an agreement was expected to coincide with bilateral between Prime Minister Narendra Modi and President Donald Trump.

 Possible Reasons for failure of agreement :

Demands by US

  1. The agreement could not be reached due to the failure to reach an agreement on Information and communications technology (ICT) products. The U.S. has wanted India to eliminate tariffs (20%) on ICT products, but New Delhi is concerned that this could open up the market to flooding by Chinese technology.
  1. The U.S. wanted greater access to Indian markets for medical devices, such as stents and knee implants, ICT and dairy products and sought the removal of price caps.
  1. The US had sought the removal of price caps (“Trade Margin Rationalization” or TMR) on medical devices and greater access for dairy products and some other categories of agricultural goods.

Demands by India

  1. On its part, India wanted the reinstatement of preferential market access to U.S. markets under the Generalized System of Preferences (GSP) program, which was revoked in early June.
  1. It had also wanted facilitation of processes in agricultural product markets where it already had access (such as easier certification of food product irradiation facilities) and greater access in some agricultural markets (table grapes, pomegranates for instance).

Although a limited trade package could not be finalised, the two sides had “narrowed their areas of difference”, and made “significant progress”. The two leaders, therefore, felt that they were optimistic in terms of reaching some kind of a trade agreement in the near future. And discussions will continue in this regard. However, he did not provide a time frame for the conclusion of agreement.

It is believed that there are other larger issues which have prevented conclusion of deal. Some of the larger issues for the U.S. include digital trade (for instance regulations around data localization and FDI in e-commerce). India also continued to appear on U.S.’s “Priority Watch List” this year along with 10 other countries. The annual list identifies countries which, according to the U.S., pose challenges to American intellectual property rights.

Source: The Hindu



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