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India hopeful Biden could restore GSP benefits, but free trade deal to be on backburner

The Joe Biden administration is unlikely to be keen on launching talks for having a free trade agreement with the Modi government.

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New Delhi: As the Joe Biden administration takes charge in the US next month, India is planning to once again push for the restoration of trade benefits worth $6 billion under the Generalised System of Preferences (GSP), ThePrint has learnt.

However, a “trade deal” per se will not be struck in the next couple of years even as the Narendra Modi government sees a “fresh approach” to the trade ties between the two countries with the appointment of Katherine Tai as the new US Trade Representative (USTR), official sources told ThePrint.

Biden has made it clear that he will not enter into any free trade agreements with any country but the chances of even a “mini trade deal”, also known as a preferential trade agreement (PTA), may not be the focus of the new administration, a source said. The Biden administration could, however, restore the GSP benefits for which India had been pushing the Donald Trump regime as well, added the source.

Until it was removed from the GSP list in June 2019, India used to get benefits worth around $6 billion — out of the $46 billion worth of goods it exports to the US — by means of zero or reduced tariffs on 2,167 products. The preferential treatment was given mostly to labour-intensive sectors like leather, jewellery and engineering.

Mark Linscott, who was Assistant US Trade Representative (USTR) for South and Central Asian Affairs from December 2016 to December 2018, said: “There is no likelihood of FTA talks to be launched for a long time. There are many US sceptics, including the whole USTR Office, and the new USTR will feel the same way. Also, the USTR negotiating authority expires next summer. To get new preferential trade agreement will require a heavy lift with the Congress.”

Linscott, who is now Nonresident Senior Fellow, Atlantic Council, added, “Hopefully some tariff cuts can be done early in the Biden administration. But I am confident there will be no serious exploration of an FTA for a long time, meaning years.”

The new USTR will, however, devote more attention to the US-India trade relationship, he said.

Tai, who is known for playing a key role in the recently signed US-Mexico-Canada agreement that replaced NAFTA, is fluent in Mandarin and expected to take a tough stance with the Chinese on trade.

Also read: India must become an industrial power to be a global strategic power — US trade body chief

Lighthizer never visited India

The Donald Trump administration had linked the restoration of benefits under GSP with having a “favourable” trade deal with India under which New Delhi was expected to grant greater market access for US’ agricultural produce.

“Trade ties under the Trump era took a peculiar pattern where negotiations proved to be ‘more transactional’ than understanding each other’s sensitivities,” said an official, who didn’t wish to be named.

Robert Lighthizer, the current USTR, did not undertake a single visit to India, which also hampered the talks to a large extent, the official said.

Under Trump, India and the US did not hold the Trade Policy Forum, which used to be a significant dialogue mechanism between both countries on matters related to two-way trade. The Strategic and Commercial Dialogue was also scrapped.

On Wednesday, Lighthizer is expected to address the Indian industry under the aegis of the Confederation of Indian Industry.

Last week, while addressing the Federation of Indian Chambers of Commerce & Industry, External Affairs Minister S. Jaishankar said India was “dead serious” to deal with the “outstanding issues” with the US on bilateral trade by working out “something bigger”.

“But, it didn’t happen and often when it comes to, you know, these trade discussions… very frankly trade discussions are like business discussions between two governments. And you know, in business, I think you and all our listeners know, I mean, it’s never done till it’s done. The devil is in the detail. You know, if you don’t close out the deal, it’s not a deal,” he said.

“FTAs are also, they’re not just trade deals, I mean even trade deals are not just straight deals, because you know, you do think of it in a somewhat strategic way. You should think of it in a somewhat strategic way and I certainly hope that we have very serious discussions once the administration comes in,” the minister added.

Also read: Events at LAC pose ‘real danger’ of goodwill between India and China dissipating, says Jaishankar


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