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New US president may change transactional nature of Indo-US trade

The final nail in the coffin of India-US relations came after the US decided to scrap India's benefits under the Generalised System of Preferences (GSP) scheme.

November 05, 2020 / 12:48 PM IST
Joe Biden (left) and Donald Trump. (AP Photo/File)

Joe Biden (left) and Donald Trump. (AP Photo/File)

In the recent years, with Donald Trump as US President, India-US trade relations have hit a rough patch. Soon after being elected to office, in March 2017, US President Donald Trump undertook a review of US' trade deficits and looked into violations of trade laws that went against US interests.

India’s exports to the US in the first quarter of FY21 were $8.13 billion while imports were $5.24 billion.

In the counting of votes, Democratic Party candidate Joe Biden is leading incumbent Donald Trump in the overall Electoral College vote tally. As of now, Trump has either won, or is leading in Georgia, Florida, Iowa, North Carolina, Ohio, Pennsylvania and Texas. Biden has either won, or is leading in Arizona, Minnesota, Nevada, Michigan, New Hampshire and Wisconsin.

India has been negotiating a trade deal with the US since 2018. However, disagreements over tariffs, subsidies, intellectual property, data protection, and access to agricultural and dairy produce are some of the key sticking points that have led to the deal not getting inked till date.

"Trump's way of dealing with trade differences was to get some benefits out and then to tom tom it about how it was all about him, how he got back such and such number of jobs into America again," Jayant Dasgupta, former Indian ambassador to the World Trade Organization, said.

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In July last year, India slapped additional customs duties on as many as 28 products, including almonds, walnuts, fresh apples, and pulses.

India is one of the largest importers of almonds from the US, having imported fresh or dried shelled almonds worth $615.12 million in 2018-19. Imports of fresh apples from the US stood at $145.20 million, of phosphoric acid at $155.48 million, and of diagnostic reagents at nearly $145 million in the same year.

The final nail in the coffin of India-US relations came after the US decided to scrap India's benefits under the Generalised System of Preferences (GSP) scheme. The scheme allowed India preferential and duty-free access to over $6 billion worth of products exported to the US.

The US accused India of denying similar equitable access to US products into Indian markets, like the decision to slash maximum retail prices of life-saving cardiac stents and essential knee implants by 65 percent-80 percent.

"Trump was transactional. His method was that if I do this, then you have to do that. He withdrew the GSP. Now we are trying to get GSP restored through the limited trade deal. With Trump, for legitimate demands too, a price had to be paid. This transactional nature of trade probably will change if Biden comes to power," Dasgupta said.

India had been trying to negotiate with the US to restore the GSP benefits. The US has also agreed to restore the GSP benefits to India as part of the mini trade deal that the two countries were aiming at. The US has been wanting lower duties for its apples, pecan nuts, walnuts, almonds and soya bean.

"With Biden, trade negotiations probably would be on a much stable footing overall. Of course US will have their own demands, so shall we. There would be a trade off between the two if Biden comes to power, and it won't be transactional in nature," Dasgupta said.
Kamalika Ghosh
first published: Nov 5, 2020 12:48 pm

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