New Delhi: India Thursday said both New Delhi and Washington are now “nearer” to a smaller trade deal than ever before as the US believes a free trade agreement (FTA) is possible even as India has walked out the Regional Comprehensive Economic Partnership (RCEP).
India and the US have been discussing a limited trade deal since last year when Prime Minister Narendra Modi visited the US in September. But both sides could not agree to a deal, owing to several differences over tariffs on a range of goods that are being traded by both sides.
“This is a certainly win-win proposition for both of us and our leadership had given direction to both sides to quickly wrap up a smaller deal and then go in for a bigger FTA. A lot of ground has been covered and perhaps we are nearer to the smaller deal than ever before… A larger perspective and a broader vision has to be put in here,” said Taranjit Sandhu, Indian ambassador to the US, at the India Global Week.
Sandhu was addressing a virtual session on ‘Partners in Revival: Time for Action’ moderated by Mukesh Aghi, president and CEO, US-India Strategic Partnership Forum.
“There are lots of areas, it is not just that only India has to send out a message of symbolism, I think this is a case of US too. This is a time to send out that message of balancing, of a win-win situation. Therefore, I hope both trade sides are able to finalise the smaller deal soon,” he added.
He also said it is “important to accommodate each other’s interest and to address issues of mutual concern” even as both sides explore new areas of cooperation.
India has been pushing the US to restore the trade benefits under its Generalised System of Preferences (GSP), which was suspended in June last year.
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“Trade and investment cooperation without doubt is an important dimension in our comprehensive global strategic partnership. Our bilateral trade has been growing at more than 10 per cent on a year-to-year basis… While growth is impressive, there’s no doubt that real potential is yet to be reached. There is opportunity in every crisis, including this one. This is time to reflect together on the global supply chains and how they can be refashioned and made more robust to withstand such crisis in the future,” Sindhu added.
Energy and defence trade will continue to be an important aspects in the two-way trade, Sandhu said, adding that the US and India will soon have the next round of energy talks.
It’s important that India ‘open’ for trade
Kenneth Juster, US ambassador to India, who was also addressing the session, said that while discussions between both the governments are on towards restoring the GSP, it is important that India also “open” for trade and manufacturing.
“India has made a clear decision not to participate in the regional agreement (RCEP) with the Chinese and other countries in Asia… In my view, the way to lock in some of the economic potential going forward is to a free trade agreement,” said Juster.
The Regional Comprehensive Economic Partnership is a mega free trade agreement that is now being negotiated among 15 countries, that includes the 10 ASEAN members — Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam — and their five trade partners — Australia, China, Japan, South Korea and New Zealand. India had walked out of the RCEP talks in November 2019.
Trade has a huge potential opportunity for both countries across services, especially in a post-Covid era, Juster said.
“I do worry at times that we don’t have big enough vision for a trade relationship… We would love to do a bilateral free trade agreement. We still get hung up even on this small interim agreement. We need to have reciprocity, but I think coming out of Covid-19, where economic growth is needed, having a trade agreement will really add impetus to the possibility of growth,” he stressed.
On Modi’s ‘Atma Nirbhar Bharat’
On PM Modi’s clarion call for ‘Atma Nirbhar Bharat’, US envoy Juster said: “I hope this means building a more resilient and stronger local economies that can participate more ably in the global economy.”
He said as companies begin to have “second thoughts” about investing in China and even “pulling out” of China, India should gear up to become an attractive alternative investment destination.
“India should become a trading region and a hub to invest not just in India, but also globally,” he added.
US-India cooperation in health during Covid
Sandhu said during the Covid crisis, India and the US got closer with greater cooperation in the health sector.
During the peak of the crisis, India relaxed export norms in order to send huge shipments of hydroxychloroquine (HCQ) and paracetamol to the US, a gesture that President Donald Trump said “will not be forgotten”.
“US and India have a history of collaborating in the production of medicines… We are collaborating on three vaccines for Covid-19,” he said.
Sindhu also added seven Indian private firms are collaborating with Gilead for the bulk production of Remdesivir, touted as the best therapeutic hope against Covid, which will be distributed to more than 126 countries.
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