India Inc. has told the U.S. government that contribution of India to the overall U.S. trade deficit is too low to create any significant adverse impact on the American economy.
In its comments submitted recently to the U.S. Department of Commerce and the Office of the U.S. Trade Representative (USTR), India’s premier business association, the Confederation of Indian Industry (CII) has also said: “In light of the large market share that U.S. products have in the Indian market, it is clear that the balance of trade issue that is perceived is not due to a market access problem.”
Modi-Trump meet
This development assumes significance as the $24.3 billion goods trade deficit that the U.S. had with India in 2016 may prominently figure in the meeting between Prime Minister Narendra Modi and President Donald Trump expected later this month in Washington DC.
While the Trump administration may also take up its concerns over the protracted negotiations on the proposed Bilateral Investment Treaty, New Delhi would raise issues such as visa curbs and non-tariff barriers of the U.S. affecting India’s exports as well as the delay in talks on a bilateral totalisation (social security) pact.
The CII’s submission followed the U.S. Commerce Department and the USTR calling for comments from the public to assist in assessing, among other things, the major causes of the U.S. trade deficit as sought in President Trump’s Executive Order on March 31.
The Executive Order sought an ‘Omnibus Report’ from the U.S. Commerce Secretary and the USTR (in consultation with other U.S. government departments/agencies) within 90 days on ‘Significant Trade Deficits’.
The U.S. government said: “The trading partners with which the U.S. had a significant trade deficit in goods in 2016 were Canada, China, the European Union, India, Indonesia, Japan, Korea, Malaysia, Mexico, Switzerland, Taiwan, Thailand, and Vietnam.”
As per Trump’s Executive Order, “unfair and discriminatory practices by our trading partners can deny Americans the benefits that would otherwise accrue from free and fair trade…”
The CII stated that: “… during 2011-2015, India’s contribution to the overall trade deficit of the U.S. was only 2.5% (average).
Thus, India’s share in overall U.S. trade deficit is too insignificant to cause any adverse impact on the U.S. economy.”
As against this, China’s contribution to the overall trade deficit of the U.S. during 2011-2015 was 43.9% (average), while that of Japan was 9.4%. Germany (8.1%), Canada (4.4%), Mexico (8.2%) and Saudi Arabia (3.5%) were higher, the CII showed.
As per the U.S. government, “the U.S. (overall) annual trade deficit in goods exceeds $700 billion, and the overall trade deficit exceeded $500 billion in 2016.”
‘High tariffs’
While the National Association of Manufacturers, the largest manufacturing association in the U.S. – has said American manufacturers continue to be challenged by India’s “excessively high tariffs on imports of a range of manufactured products”, the CII countered this by saying that “the major products that the U.S. exports to India have tariffs between 0-10%. This is lower than the tariffs other countries place on the same products in which the U.S. trades.”
The CII said though the U.S. is among the few countries that India has a trade surplus with, this must be put in context.
“Regardless of this surplus, the U.S. is the second largest exporter to India, second only to China,” the CII said.
