Commerce and industry minister Piyush Goyal heads to Washington this week to take forward the putative bilateral trade agreement (BTA) with the US. There is a warrant to tamp down expectations of any speedy conclusion of the first tranche of this deal which in any case is targeted for autumn. External affairs minister S Jaishankar gave a hint of the challenges on Thursday when he said the ongoing negotiations are complex and far from final. His comments came shortly after US President Donald Trump, speaking at a business forum in Qatar, asserted that India had offered a trade deal with zero tariffs. “It is very hard to sell in India. India has offered us a deal where basically they are willing to literally charge us no tariff,” Trump claimed, without offering further details.
In any case, there is no sense of urgency for early results to avert the threat of reciprocal tariffs being imposed by Trump. Trade negotiations are easy to start but hard to finish. Look no further than our free trade agreement (FTA) with the UK as progress stalled on a few important unresolved issues but it crossed the finishing line due to the support it received from the highest political levels. Scarcely a day passes without further details of that FTA — most of it is still not available in the public domain — which does not indicate a beneficial outcome for us.
The US trade czars who Goyal will meet — notably, secretary of commerce Howard Lutnick and United States Trade Representative Jamieson Greer — have also indicated that the BTA will take time. As 7,000 tariff lines are involved, it takes work, stated Lutnick, who added that the just-concluded US-UK FTA will act as a blueprint for upcoming trade deals. Incidentally, the US-UK deal has been criticised for being rushed through to escape Trump’s tariffs on steel and cars — a pact that is closer to a “protection payment to a mob boss than a liberalising agreement between sovereign countries”, argued Alan Beattie of the Financial Times. So if the US-UK deal is the template for our BTA, there will be pressure not only for massive tariff cuts but also strategic commitments.
Goyal’s agenda in the forthcoming negotiations includes providing greater access for US goods, rules of origin, and addressing non-tariff barriers like licences, standards including quality control orders and intellectual property rights (IPRs). India, for its part, has warned the US that it may impose retaliatory tariffs on certain US products in response to American tariffs on steel and aluminium. There is a need for similar strategic intent to ensure that we retain policy space on non-tariff barriers like IPRs. Taking lessons from our UK FTA, there is no need to agree to rules that weaken our patents regime and threaten the industry’s ability to produce affordable generic drugs. We have also provided far-reaching access to UK firms to participate in government procurement. The UK was supposed to provide concessions on greater access for Indian professionals but there are serious doubts regarding the number and duration of business visitor visas on offer. A major gain no doubt was the Double Contribution Convention under which our professionals will be exempt from paying social security contributions for three years. All of this has a bearing on India’s BTA negotiations in Washington. There is no need to push for an early deal that entails surrendering policy space.