‘India, U.S. must give and take on trade issues’

Union Minister Suresh Prabhu’s Washington visit may make progress in resolving tariff disputes, says USISPF’s Aghi

June 09, 2018 08:35 pm | Updated 08:54 pm IST - Washington

Union Commerce and Industry Minister Suresh Prabhu’s meetings with senior U.S officials next week will make progress in resolving outstanding trade issues between the two countries, said Mukesh Aghi, president of the U.S-India Strategic Partnership Forum (USISPF).

Mr. Prabhu is reaching the U.S. on Sunday for a five-day visit during which he is scheduled to meet U.S. Trade Representative Robert Lighthizer and U.S. Commerce Secretary Wilbur Ross.

A series of trade issues accumulated over the recent months had cast a shadow over the talks. Asked whether the discussions could be contentious, Mr. Aghi, who had been in touch with officials on both the sides, said: “There are fundamental differences. [The] U.S. has put tariffs on steel and aluminium; India has issues with medical devices sold in the country. There are concerns on both sides. I think the more they talk, they will move towards solutions on all this.” The USISPF is a forum of more than 250 American companies that have significant interest in India.

Steel, aluminium tariffs

The U.S. had invoked Section 232 (b) of the U.S. Trade Expansion Act of 1962 to impose 25% duties on steel and aluminium from India. India had taken the issue to the World Trade Organisation (WTO). The U.S. is also challenging India at the WTO for its export subsidy programmes. America is also in the process of terminating the Generalised System Preferences (GSP) under WTO for India which allows many exporters to enjoy lower tariffs on specific exports to the U.S. Price restrictions imposed by India on medical devices imported from America is also being objected to by the Trump administration.

Larger and long-term interests with India will guide the policy of the Trump administration, and the current disputes are “transactional” in nature, according to Mr. Aghi. “There is a strong alignment between India and the U.S. on all issues around the world. The value systems of both countries are exactly aligned. These issues are all transactional. Look at what is happening between U.S. and Canada, its largest trading partner and oldest strategic partner. Mr. Prabhu will be able to explain India’s position, though they may still agree to disagree on some issues.”

Asked what could be the give and take possible given the strong positions being taken by both India and the U.S., Mr. Aghi said: “We feel that the U.S. should discontinue the process to terminate the GSP for India, which amounts to exports of six billion dollars from India. And, India should work on moving towards trade margin rationalisation for medical devices, which is a globally acceptable mechanism to ensure fair pricing. This will be a win-win solution for both countries,” he said. American medical device manufacturers and dairy sector are pushing for punitive measures against India by the USTR and these issues are likely to dominate the Ministerial level talks next week.

Positive feedback

Mr. Aghi said the USISPF and business leaders associated with it have got positive feedback from U.S. lawmakers on exempting India from the Countering America’s Adversaries Through Sanctions Act or CAATSA, a law that targets Russia. “It is unfortunate. It was designed for Russia. India has become an innocent victim. We have been reaching out to lawmakers, including Senator Chuck Schumer (Minority leader in Senate), Nancy Pelosi (Minority leader in the House of Representatives) for an exemption for India. What we find is [a] strong sentiment that India should be given an exemption.

“While everybody is agreeing to it, the question is how we close it. It is unfortunate, given that India is buying more U.S. equipment in recent years.

“But still India cannot abruptly turn around the purchases from Russia that still constitutes significant amount of Indian defence purchases. I feel that we will be able to resolve this.”

American companies are also protesting India’s move to enforce localisation of data, another issue on the agenda of talks for Mr. Prabhu. “It is not just a question of policy but also of technology. India is a sovereign nation, and it has a right to protect its data. At the same time, India is isolating itself from a seamless global system if it insists on cutting off from it. So, a solution has to account for both this, and it is possible,” said Mr. Aghi.

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