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HomeDiplomacyIndia, US look to clinch ‘watered down’ trade deal after differences scuttle...

India, US look to clinch ‘watered down’ trade deal after differences scuttle larger pact

Problems arose after a series of last-minute demands by US negotiators & concern among Indian counterparts over pressure from lobbies back home.

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New Delhi: Prime Minister Narendra Modi and US President Donald Trump failed to clinch a ‘limited’ but much-anticipated trade deal at their bilateral meeting in New York Tuesday even though the two sides had worked hard to put one together.

A series of last-minute demands by US negotiators and concern among their Indian counterparts over pressure and opposition from Indian industries and the farm sector, among others, were responsible for this failure, multiple sources told ThePrint.

Both sides, however, will continue talks and expect to produce at least a “watered down” version of the deal by the end of this week.

Indian industries and farmer lobbies do not want Modi to offer much to the US in terms of lowering of tariffs on American farm produce or industrial goods, the sources said.

They said that RSS-affiliated bodies such as the Bharatiya Kisan Sangh and the Bharatiya Mazdoor Sangh are not much in favour of a deal. These groups also vehemently oppose the Regional Comprehensive Economic Partnership (RCEP) trade pact in which India is a party.

After his meeting with Trump, Modi tweeted that talks were still going on to improve trade ties.

“Great meeting with @POTUS @realDonaldTrump in New York. We had extensive deliberations on a wide range of subjects including improving trade relations. Continuous engagement between India and USA is a wonderful sign, auguring well for our nations and the world,” the PM said.


Also read: India wants concrete steps from Pakistan before talks, Modi tells Trump at bilateral meet


Talks still on for a ‘watered down’ trade deal

After the bilateral meeting between Trump and Modi, president of US-India Business Council Nisha Biswal tweeted: “US and Indian negotiators still not in agreement on a mini deal on trade but will continue to talk and work through issues.”

“Past 12-18 months have been characterized by lack of progress on trade as India headed to the polls…With US elections around the corner, the time is now for India to get some issues resolved and demonstrate that we can get a deal done,” said Biswal, who is also the former assistant secretary of state for south and central Asia.

Though the ‘limited’ trade package didn’t materialise, negotiations are still going on between Commerce and Industry Minister Piyush Goyal and US Trade Representative Robert Lighthizer in New York to come up with a “watered down” version of the deal.

Goyal is expected to stay in New York until the end of this week. He flew to the US Monday morning to negotiate the deal. His visit to the US was unscheduled as he was asked to fly to America directly from Dubai, where he was attending the DubaiExpo2020, to hold talks on the deal.

“I do think there’s still a chance of a deal. But if there is a deal, it will likely be a more watered down version than what had been hoped for. And given the difficulties at play, that would be wholly unsurprising,” said Michael Kugelman, deputy director of the Asia Programme and senior associate for South Asia at the Washington-based think-tank Wilson Center.


Also read: Modi can handle terrorism from Pakistan, he will solve the problem, says Donald Trump


US came up with ‘last-minute demands’

Sources familiar with the trade negotiations said the US came up with a series of “last-minute demands”, especially in terms of lowering of tariffs on agricultural goods and information and communications technology (ICT) products, which became difficult for the Modi government to meet.

India also did not meet the US demand of doing away with price caps on medical devices, sources said, even though it agreed to remove them when Goyal and Lighthizer spoke over the phone earlier this month.

The trade pact, which has been in the works for more than a year now, is expected to be the first step towards India and the US announcing a free trade agreement (FTA) in the coming years.

“There are far too many contentious issues that had to be resolved prior to launching talks for a free trade agreement. These issues need to be resolved amicably before forging any relationship,” said Biswajit Dhar, JNU professor and former head of WTO studies at the Indian Institute of Foreign Trade.

Alyssa Ayres, former deputy assistant secretary of state for South Asia in the Barack Obama administration, said “I’ve always been sceptical (of the trade deal) — these issues are difficult to resolve as it is, and not readily amenable to action-forcing deadlines. I also think there’s been too much made of what will likely be a minor bit of progress against a still-lengthy set of challenges to go.”

‘Trump’s comments on Pak didn’t go down well with Modi’

Addressing a press conference in New York jointly with Modi Tuesday, Trump said Pakistan is not much of a concern for him when it comes to terrorism as his bigger concern is terrorism emanating from Iran.

Trump also said at some point Modi and Pakistan Prime Minister Imran Khan would have to come together for a dialogue.

“To be sure, Trump’s comments with Modi on his side, particularly those appearing to downgrade the terror threat in Pakistan, would not have gone down well with Modi,” Kugelman said.

Meanwhile, Modi, along with Foreign Minister S. Jaishankar and Goyal, will be addressing CEOs and representatives of over 40 American conglomerates in New York Wednesday. Modi will seek investments from these companies — crucial for the Indian economy that is facing a slowdown.

Modi is scheduled to return to India by 27 September after his address to the UN General Assembly, while Jaishankar is expected to stay back until next week.

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1 COMMENT

  1. Let’s not get carried away with Trump. He is goody goody to India because he wants the votes of the Indian Americans. He couldn’t care less about Indian concerns over Pakistan. Let India be realistic in dealing with this guy.

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