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Mini trade deal ‘stuck’ as US now wants India to buy $6 billion of agriculture, dairy goods

The deal is ready to be signed, but US says if India wants trade benefits under GSP restored, it must give business equivalent to that amount.

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New Delhi: The proposed ‘mini’ trade deal between the US and India seems to be stuck once again, and this time, Washington wants New Delhi to buy dairy and agriculture products worth $6 billion, ThePrint has learnt.

The ‘mini’ trade deal, which has been finalised and is ready to be signed, is only stuck due to this condition, multiple sources told ThePrint.

According to the sources, the demand came at the “last moment” from US Trade Representative Robert Lighthizer, who has now demanded that if India wants restoration of the trade benefits under the Generalised System of Preferences (GSP) programme, it has to give “business equivalent of that amount” to the US.

“The USTR has been quite difficult during the interactions and the demand continues to increase from their side,” a top official who did not wish to be identified told ThePrint.

India has been pushing the US to restore the GSP trade benefits since they were suspended in June last year. 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 in labour-intensive sectors like leather, jewellery and engineering.

Also read: How a dispute over American chicken legs pushed India-US trade ties downhill

Insistence on agriculture and dairy goods 

The USTR has told India to buy agricultural and dairy products such as chicken, apples and almonds worth $6 billion, sources said. India, they added, is willing to make up for it by enhancing energy trade between both sides, but the Donald Trump administration is “insistent” on agricultural and dairy goods.

This is because such a move will appeal to the farming and dairy community of the US that forms a massive vote bank for Trump.

While both sides had formally announced that they would work towards a larger free trade agreement (FTA), the US’ main demand under the smaller pact was to obtain greater access to Indian markets for its agriculture produce.

Last month, during an event organised by the US-India Business Council (USIBC), India’s minister for commerce and industry, Piyush Goyal, had said the countries are looking at an early harvest in the form of a preferential trade agreement or PTA.

USIBC president Nisha Biswal and former US assistant secretary of state for south and central Asian affairs under President Barack Obama, said a mini trade deal is very much doable.

“Both governments have been working towards this for some time and I think they are very close. But the time to finalise it is now. We know there are issues outstanding, but we need to show we can resolve some things before trying to tackle everything in this complex relationship,” she said.

Sources added the delay is also because the US’ attention right now is more towards curbing Chinese imports entering its market, as tensions between the two continue to soar.

Biswal said, “We urge them (the governments) to conclude the deal, especially now with a desire to elevate the US-India corridor in the face of tensions with China.”

Mukesh Aghi, president and CEO of the US-India Strategic Partnership Forum (USISPF) said, “We are working both with the White House as well as the USTR to hammer a win-win deal for both the countries. We don’t want it to become a political issue. Question is how to make it a priority when the attention is all towards China.”

Also read: India needs policy ‘predictability’ to be an alternative to China: US-India trade body

US Presidential polls could delay deal

Both the USIBC and the USISPF have written to the White House and the Office of the USTR to sign the smaller trade deal before the presidential elections in November.

The unnamed official quoted above said: “If the (mini) deal is not signed in the next two-three weeks, the countries will have to start from scratch”.

Aghi agreed that the right time to close a small trade deal was now. “No matter which administration comes in post the elections, this will have a positive impact on the bilateral relations. So, doing a small deal now and continuing the talks for a bigger one with the next administration is something that we are looking at.”

American businesses have also been pushing for the smaller trade deal, while the countries’ respective ambassadors Taranjit Singh Sandhu and Kenneth Juster have also batted for it.

“Things right now are really close and we can do the deal in the coming weeks… While some may be tempted to wait until after the election, I fear that we will lose another 12 months and will end up having to start from zero if we wait until after the election,” USIBC’s Biswal said.

The deal has been in the works for the last year, ever since PM Narendra Modi went to the US in September. There were high hopes in February 2020 that the countries would sign the deal when Trump visited India, but on both these occasions, the deal got stuck over issues concerning market access and tariffs.

Also read: Forget trade deal, ease of doing business, US can’t sell own property in Mumbai for 5 years


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  1. In long run this would destroy or even vanish our agriculture industry, as such our farmers not getting their dues properly, It is understood that why it is still in hold mode.

  2. India should also ask for $6 billion of manufacturing to be moved to India since we are mostly agriculture country and people would would hit by US agriculture imports would need new job and what better could be then manufacturing jobs! A win win!

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