{"id":54431,"date":"2020-02-20T17:31:00","date_gmt":"2020-02-20T12:01:00","guid":{"rendered":"https:\/\/blogadmin.forumias.com\/?p=54431"},"modified":"2020-02-26T17:32:40","modified_gmt":"2020-02-26T12:02:40","slug":"7-pm-trading-with-america-on-proposed-india-usa-trade-agreement-20th-february-2020","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/7-pm-trading-with-america-on-proposed-india-usa-trade-agreement-20th-february-2020\/","title":{"rendered":"7 PM |Trading with America: On proposed India &#8211; USA trade Agreement| 20th February 2020"},"content":{"rendered":"\n<p><strong>Context:\n<\/strong>India-US\ntrade relations.<\/p>\n\n\n\n<p><strong>More\nin news:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>President Donald Trump is set to make\nhis maiden visit to India on February 24-25, 2020.&nbsp;<\/li><\/ul>\n\n\n\n<p><strong>India\n\u2013 US Trade Relations:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>The US is now India\u2019s second largest\ntrading partner and largest export destination, with India having a small trade\nsurplus of around $20 billion.<\/li><li>The US is also the largest provider of\nforeign direct investment (FDI) around $45 billion to India, with India\ninvesting close to $10 billion in the US.&nbsp;<\/li><li>Bilateral trade has been steadily\nincreasing. In 1995, total two-way trade, including goods and services, between\nIndia and the US was $11 billion while in 2018, it reached $142.1bn,&nbsp;with\nIndia having a surplus of $24.2bn, according to official US data.<\/li><li>India mostly exports gems,\npharmaceuticals, machinery, mineral fuels and vehicles to the US.<\/li><li>Apart from agricultural produce, the US\nexports to India precious metals and stones, mineral fuels, aircraft,\nmachinery, and optical and medical instruments.<\/li><\/ul>\n\n\n\n<p><strong>Why\ntrade with the US matters to India?<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>India recently backed out of\n&nbsp;Regional Comprehensive Economic Partnership (RCEP), the world\u2019s \u201clargest\u201d\nregional trade pact. Shuting &nbsp;the door on\nthe large \u201cintegrated market\u201d that the RCEP deal was offering, it is important\nfor India to look for other sizeable market. <\/li><li>Also, in the backdrop of the global\neconomic slowdown, where India\u2019s global exports have&nbsp;fallen consistently,\nit is important for the country to diversify and strengthen bilateral relations\nwith other markets.<\/li><li>Thus, India has set its sights on \u201clarge\ndeveloped markets\u201d, improved access to which would help its industry and\nservices sectors, which includes the US. US over the last two decades has\nbecome a crucial trading partner in terms of both goods and services.<\/li><\/ul>\n\n\n\n<p><strong>Key\nsticking points of the trade deal between India and US:<\/strong><\/p>\n\n\n\n<p>Negotiations on\nan India-US trade deal have been ongoing since 2018, but have been slowed by\n\u201cfundamental\u201d disagreements over tariffs (taxes or duties on imports), subsidies,\nintellectual property, data protection, and access for agricultural and dairy\nproduce.&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>India\nis described as the &#8220;king&#8221; of tariffs:<\/strong><\/li><li>Despite\ngrowing political and strategic ties, there&#8217;s been tension over trade issues.\nPresident Trump says India&#8217;s tariffs &#8211; taxes on imports &#8211; are\n&#8220;unacceptable,&#8221; and has described India as the &#8220;king&#8221; of\ntariffs.<\/li><li>India&#8217;s\naverage tariff rate in 2018 was 17.1% &#8211; that is significantly higher than the\nUS, Japan and the EU, all of whom had rates of between 3.4% and 5.2%.<\/li><li>However\nIndia comes out better on trade-weighted average tariff. In 2017, India&#8217;s\ntrade-weighted average tariff was 11.7%, Brazil&#8217;s was 10% and South Korea&#8217;s was\n8.1%.<\/li><li>India\nis not alone in charging high duties &#8211; for example, Japan, South Korea and Australia\nall have high tariffs on specific imports. The US imposes a 350% tariff on\ncertain types of tobacco<\/li><li><strong>Steel\nand Aluminium tariff issue:&nbsp;<\/strong>In 2018, the US imposed&nbsp;<a href=\"https:\/\/indianexpress.com\/article\/business\/economy\/us-import-tariffs-on-steel-aluminium-india-hits-back-to-suspend-concessions-on-30-products-5219944\/\">additional tariffs<\/a>&nbsp;of\n25% on steel and 10% on aluminum imports from various countries, including\nIndia.&nbsp;Government approached the WTO\u2019s Dispute Settlement Body against the\nUS move. Simultaneously, trade officials are taking the issue to the US Trade\nRepresentative and other higher platforms.&nbsp;<\/li><li><strong>GSP\nWithdrawal citing market access issues:<\/strong><\/li><li>The\nGeneralized System of Preference (GSP) is the largest and oldest US trade\npreference programme and is designed to promote economic development by\nallowing duty-free entry for thousands of products from designated beneficiary\ncountries.<\/li><li>In\nJune, President Trump terminated India&#8217;s designation as a beneficiary\ndeveloping nation under the key GSP trade programme after determining that New\nDelhi has not assured the US that it will provide &#8220;equitable and\nreasonable access&#8221; to its markets.<\/li><li>Also,\nUS accused India of slashing maximum retail prices of life-saving cardiac\nstents and essential knee implants by 65%-80%, put tariffs on information and\ncommunication technology products, and demand that exporters of dairy products\ncertify their produce was derived from animals not fed food containing internal\norgans.<\/li><li><strong>Use\nof commercial policy by India:<\/strong>&nbsp;as a response to the US\ntariff on Steel and Aluminium, Commerce Ministry on June 20th&nbsp;notified\ntariff hike on 29 US products, including almonds, apples and phosphoric acid\netc. (worth $10 bn) in retaliation to the steel and aluminium tariff hikes by\nthe US.&nbsp;At the same time, India reduced tariff on selected imports from\nIndia including that on few categories of bikes to defuse the trade tension.<\/li><li><strong>Agriculture:<\/strong> The\nUS has long demanded greater access for American agriculture and dairy\nproducts. For India, protecting its domestic agriculture and dairy interests\nwas a major reason to walk out of the RCEP agreement.<\/li><li><strong>Medical\ndevices:<\/strong>\n<\/li><li>Trade\nnegotiations over the last one year have grappled with the issue of improved\naccess for American medical devices firms to India.<\/li><li>India\nis working to finalise a proposal to move from caps on prices of medical\ndevices to limiting the margins of those involved in the supply of the\nproducts. However, it is unclear whether this would mean the government might\nbe willing to reconsider its earlier, widely publicised decision to slash, in\nthe public interest, prices of stents and knee implants.<\/li><li>The\nhealth cess on imported medical devices announced in the&nbsp;Budget&nbsp;for\n2020-21 too, may be seen as a negative for the American side, as the US is\namong the top three exporters of these categories of products to India.<\/li><\/ul>\n\n\n\n<p><strong>Way\nForward: <\/strong><\/p>\n\n\n\n<p>A new trade\nagreement must be about preparing India for profound changes in the global\neconomic order, buffeted by Trump\u2019s politics as well as the unfolding\ntechnological disruption.&nbsp;Getting India\u2019s most important trade\nrelationship right in the near term and charting a bold course for a mutually\nbeneficial commercial partnership with the US over the long term are urgent and\nworthy goals in themselves.<\/p>\n\n\n\n<p>India\u2019s trade\nsurplus with the US came down to $16.9 billion in 2018-19. the surplus could be\nreduced further through imports of products such as aircraft from American\nfirms. Experts feel that India and the US could begin with some \u201clow-hanging\nfruit\u201d to indicate their willingness for a deeper economic commitment. This\nincludes the US reinstating India\u2019s benefits under the GSP programme, and India\ndoing away with duties on motorcycles.<\/p>\n\n\n\n<p><strong>Source:\n<\/strong><a href=\"https:\/\/indianexpress.com\/article\/opinion\/columns\/india-us-trade-donald-trump-visit-modi-6276480\/\">https:\/\/indianexpress.com\/article\/opinion\/columns\/india-us-trade-donald-trump-visit-modi-6276480\/<\/a><strong><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Context: India-US trade relations. More in news: President Donald Trump is set to make his maiden visit to India on February 24-25, 2020.&nbsp; India \u2013 US Trade Relations: The US is now India\u2019s second largest trading partner and largest export destination, with India having a small trade surplus of around $20 billion. The US is&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/7-pm-trading-with-america-on-proposed-india-usa-trade-agreement-20th-february-2020\/\">Continue reading <span class=\"screen-reader-text\">7 PM |Trading with America: On proposed India &#8211; USA trade Agreement| 20th February 2020<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[130,955],"tags":[],"class_list":["post-54431","post","type-post","status-publish","format-standard","hentry","category-7-pm","category-7-pm-brief-infograph","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704821735},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/54431","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=54431"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/54431\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=54431"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=54431"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=54431"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}