Minister of Commerce and Industry Piyush Goyal, who is in the US on an official visit, held a series of meetings with the CEOs of investment and financial giants in New York on Monday.
He will attend the 13th Trade Policy Forum (TPF) meeting being hosted by US Trade Representative Katherine Tai in Washington on January 11. Goyal will also hold a bilateral meeting with Tai.
TPF is a platform for continuous engagement between the two countries in the area of trade and to further bilateral trade and investment relations. The 12th TPF Ministerial was held in New Delhi on November 23, last year after a gap of four years. There was no TPF in 2022.
“There will be some glossing over of serious bilateral trade problems, positive language on the architecture of TPF discussions across goods and services, and repackaging of specific areas of the agenda, such as labour, environment, and good regulatory practices, as part of a new working group on ‘resilient trade’,” said Mark Linscott, the former assistant US trade representative (USTR) for South and Central Asian Affairs.
But it will be difficult to avoid the conclusion that the current approach on bilateral trade is not working, noted Linscott. Established in 2005, the Trade Policy Forum is the leading bilateral mechanism to discuss trade-related matters.
Two possibilities for 2023 could substantially alter the dynamics and put the trade relationship on a better, healthier course for the future, he said. The first would be reauthorisation of the US Generalized System of Preferences (GSP) programme by Congress so that the two sides could come back to the table in the TPF with enticements to offer for concluding a wide-ranging trade agreement.
“If the United States could offer the reinstatement of India’s GSP benefits, the prospects are strong that the two sides could reach an agreement on a series of issues, covering agriculture, health-sector products, digital services, and new trade issues (e.g., environmental sustainability and more equitable distribution of the benefits of trade),” Linscott said.
The second would be a reversal of the Biden administration’s allergy to negotiating free trade agreements (FTAs), which has handicapped the US in competing in global markets as their trading partners negotiate preferential trade terms among themselves (India concluded an FTA with the United Arab Emirates (UAE) and an interim FTA with Australia in 2022 and is actively negotiating with the UK, European Union, and Canada).
The playing field has become less level for US export interests as a result, and a more captive US domestic market is neither realistic nor more beneficial, he said.
“While it is unlikely that India would be at the top of the list for early negotiation of an FTA if the Biden administration changes course (the United Kingdom and Kenya are more likely candidates), even the start of an exploratory process for a US-India FTA would kickstart the expansion of the trade relationship,” he said.
The two governments would experience new, exciting dynamics in their bilateral engagement, more attention from stakeholders on both sides, and enhanced leverage to fix problems and venture into new frontiers on trade, Linscott said.
Kyle Gardner, a nonresident senior fellow at the Atlantic Council’s South Asia Center, said, as with the last TPF delicious deal on mangoes and cherries, progress in each of the focus areas is likely to be incremental.
“This is especially so until Washington has the ability to offer GSP benefits to India as an incentive. But there are also broader policy opportunities that neither side should lose sight of, particularly on digital trade and services,” he said.
“Ensuring commitments to the cross-border data flow to maximize the growth of both countries’ digital economies will have a far bigger impact on long-term trade growth than tit-for-tat tariff reductions,” he said.
Gardner said that despite a long list of irritants, there is much to celebrate. As every investor knows, however, past performance is not always indicative of future results.
“Expectations are conspicuously modest from the TPF with stakeholders anticipating a summit short on tangible outcomes. The sides may be meeting primarily out of recognition of the importance of high-level trade dialogue between the two responsible cabinet officials,” said Atman Trivedi, who served as Senior Director for Policy in Global Markets at the US Commerce Department during the Obama administration.
The US and India habitually enter trade discussions from different vantage points that reflect starkly different economic circumstances, traditions, and systems, he said.
“At present and for the foreseeable future, neither country is keen to make concessions on tariff and non-tariff barriers,” Trivedi said.
Observing that India-US trade talks have not gained as much traction in the Biden administration as during Biden’s predecessor Donald Trump’s tenure when the two sides were close to a mini-trade deal, Adnan Ahmad Ansari, a nonresident senior fellow at the Atlantic Council’s South Asia Center, said the restart of the TPF provides an opportunity to change that.
Washington and New Delhi would be wise to use the TPF to discuss areas of alignment on inclusive digital trade, as well as potential digital cooperation during India’s G-20 presidency, said Anand Raghuraman, a nonresident fellow at the South Asia Center and a director of Global Public Policy at Mastercard.
According to the commerce ministry, in 2021-22, the bilateral trade between the US and India stood at USD 119.42 billion as against USD 80.51 billion in 2020-21.
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