The US seeks quid pro quo for restoring India’s GSP beneficiary status.
By Arun Kumar
There are few signs of a thaw in US-India tariff war with both sides sticking to their guns despite personal interventions by President Donald Trump and Indian Prime Minister Narendra Modi.
Ongoing â€œbig negotiationsâ€ with India are clearly taking longer than expected, US Trade Representative Robert Lighthizer told the Senate Finance Committee Thursday.
â€œThey are dogged and insistent on keeping their tariffs and we’re dogged in insisting that we’re going to get a fair deal,â€ he said. â€œSo, we’re still working on it very much. And hopefully we’ll get to a good outcome,â€
â€œWe have a big negotiation with India which I’m sure you’re aware of and potentially even moving to an FTA (Free Trade Agreement) at some point if we can ever make any headway, and that’s Asia.â€
â€œWe have a lot of ongoing discussions. We call them TIFAs, trade and investment discussion forums or negotiating forums with most of the countries throughout that area,â€ Lighthizer said.
Trump Administrationâ€™s top trade official said the US was mulling restoring Indiaâ€™s preferential trade status under its Generalized System of Preferences (GSP) that was terminated in June 2019 for failing to assure â€œequitable and reasonable accessâ€ to Indian markets.
However, it was waiting for â€œan adequate counterbalancing proposalâ€ from India, which was the largest beneficiary of the GSP program in 2017 with $5.7 billion in imports to the US given duty-free status.
â€œWe’re in negotiations with India, we took away their GSP, and we’re in the process of restoring it if we can get an adequate counterbalancing proposal from them,â€ Lighthizer told lawmakers.
â€œTill now, we haven’t done that. But this is something that we’re actually actively negotiating right now,â€ Lighthizer said, responding to a question from Senator Maria Cantwell from the Washington State.
The US trade official assured lawmakers that the US was negotiating with India for removal of its high tariffs â€œon pulses and on just about everything else,â€ but lamented â€œthere’s nothing that the US can do about thatâ€ thanks to Indiaâ€™s World Trade Organization (WTO) status as a developing country.
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â€œThe MFN tariffs that India has are extremely high on pulses and on just about everything else,â€ Lighthizer said. â€œOne of the indictments I have of the WTO is the fact that we find ourselves in this position.â€
â€œWhen India joined the GATT, then the GATT, in like 1948, they had a GDP of maybe $250 billion,â€ he said. â€œNow they’re almost $3 trillion and they still have a third of their lines of tariffs not bound at all and a whole bunch of them bound at 100 percent.â€
â€œAnd there’s nothing that the US can do about that,â€ he told the senators wondering, â€œHow do we change that?â€
â€œThe notion that we’re locked into a WTO that says just forever you’re stuck with that imbalance is, to me, crazy. And we have to do something about it,â€ he said.
â€œWe, of course, agree with you and we agree that — that their regular tariffs are bad, their retaliatory tariffs are even worse,â€ Lighthizer told Cantwell who had expressed concern over Indiaâ€™s â€œ70 percent tariff on apples, so obviously a big productâ€ in her State of Washington.
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Senator Steve Daines from Montana too expressed concern over high import tariffs on pulses by India, which is the largest consumer of pulses and an important market for Montana farmers. â€œUnfortunately, US pulses face high tariffs and an unfair playing field in India,â€ he said.
Before Trumpâ€™s India visit in February, Daines and Senator Kevin Cramer from North Dakota had submitted a letter to the President urging him to prioritize the issue and raise it directly with Modi.
â€œIn fact, I was pleased to see the president, President Trump, hand deliver that letter to Prime Minister Modi,â€ he said. â€œIn fact, he sent a picture back handing that specific letter to the prime minister and wanted to make sure that we saw it.â€
US-India bilateral meeting on April 11 to settle trade disputes (April 6, 2018)
US-China trade war will hurt India: Gita GopinathÂ (March 26, 2018)