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Fresh push for trade benefits, totalisation pact as India & US revive trade forum

Commerce and Industry Minister Piyush Goyal and US Trade Representative Katherine Tai hold India-US Trade Policy Forum, four years after it was junked by Trump administration.

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New Delhi: India Tuesday pushed for the restoration of trade benefits worth $6 billion under the US’ Generalised System of Preferences (GSP), taken away under the Donald Trump administration, as the two countries revived the India-US Trade Policy Forum after four years. 

Other discussions at the forum, held between Commerce and Industry Minister Piyush Goyal and US Trade Representative Katherine Tai, centred on some long-standing issues such as enhanced marked access for agricultural goods, intellectual property rights and totalisation agreement. These date back to the presidency of Barack Obama (2008-2016).

Apart from this, the two sides decided to work on “emerging issues” such as child labour and forced labour in global supply chains.

According to a joint statement issued after the meeting, the “ministers reviewed their particular interests for achieving progress in the area of market access”. 

“India highlighted its interest in restoration of its beneficiary status under the US Generalized System of Preferences program,” it added, saying the “United States noted that this could be considered, as warranted, in relation to the eligibility criteria determined by the US Congress”. 

“The United States and India also exchanged views on potential targeted tariff reductions,” the joint statement added.

India was removed from the GSP list in June 2019 under the Trump administration, which wanted to have a free trade agreement between both countries. However, as the Joe Biden administration came to power, it was clear that a trade pact will not be Washington’s priority.  

Under the GSP scheme, India used to get benefits worth around $6 billion by means of zero or reduced tariffs on 2,167 products. This was given on the $46 billion worth of goods India exports to the US. The preferential treatment was given mostly to labour-intensive sectors like leather, jewellery and engineering.

The TPF is the highest decision-making mechanism between India and the US on bilateral trade and investment issues. The last round of the TPF was held in October 2017 in Washington DC, after which the Trump administration junked it and began talks for a trade deal.

A readout issued by the Office of the USTR said “Ambassador Tai expressed satisfaction that the TPF meeting produced a joint statement reflecting shared concerns and priorities, highlighting areas for further work, and outlining the potential for deeper bilateral cooperation on important issues including, digital trade; agriculture; the relationship between trade, labor and the environment; good regulatory practices; and standards and conformity assessment”. 

Both sides have agreed to continue the TPF from now on. The next round will be held in 2022. 

This was USTR Tai’s maiden visit to India since taking charge. She also met External Affairs Minister S. Jaishankar before leaving for the US.

Also Read: US, India are set for tough talks as US Trade Representative Tai comes calling this month

Trade issues from Obama era discussed 

As India and the US “revitalised” the TPF, the two sides discussed some trade issues that have been ailing the relationship since the Obama era, like enhanced market access for the US’ agricultural goods, intellectual property rights and the totalisation agreement, among others.

According to the joint statement, an agreement is being finalised on market access facilitation for mangoes and pomegranates, and pomegranate arils from India, and cherries and alfalfa hay for animal feed from the US.

On the social security totalisation agreement, the two sides decided to continue negotiations.

Talks for a social security totalisation agreement between India and the US have been going on since 2007.

Once concluded, this will allow Indian workers to get back their contributions towards the US’ Social Security programme after they leave their jobs in the US and come back to India. As things stand, Indian professionals are not able to bring back the money they pay as part of the tax, an amount that currently stands at around $3 billion. 

Discussions on medical devices, intellectual property 

Trade Margin Rationalisation (TMR) on high-end US-made medical devices — an issue that became a stumbling block during the Trump era — was among the other issues discussed. 

The joint statement said the “US side acknowledged the work being done by the Indian side to strike a balance between access to medical devices at affordable rates and the availability of cutting edge medical technology”. 

“In this regard, the United States welcomed the recent application of the Trade Margin Rationalization (TMR) approach for price regulation on certain medical device products and India noted that wider application of TMR for other medical devices is under consideration by the relevant authorities,” the joint statement said. 

Trade margin is the difference between the price at which manufacturers or importers sell to trade (price to trade) and the price to patients (maximum retail price). 

The US along with its pharma lobby groups have been pushing India to do away with arbitrary price controls on high-end and premium medical devices manufactured by American firms, in favour of the TMR, while Indian healthcare players are against such a move. 

Labour rights discussed too 

For the first time ever in the history of India-US trade, both sides agreed to address “emerging issues” of child labour and forced labour in order to smoothen global supply chains and make them more resilient and sustainable. 

“The ministers shared perspectives on the role of trade in improving the welfare of working people in India and the United States,” the statement said.

(Edited by Sunanda Ranjan)

Also Read: India’s trade deal with the US remains a non-starter for now. Here’s why


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