U.S. and Indian officials are nearing a trade negotiation breakthrough, according to multiple administration officials and industry insiders familiar with the talks, hoping to unveil at least a preliminary agreement during Indian Prime Minister Narendra Modi’s visit this week.
“I can confirm intensive discussions between [trade officials] on both sides, putting together a trade package,” an administration official told the Washington Examiner.
U.S. Trade Representative Robert Lighthizer’s team is racing to conclude discussions about the preliminary agreement over the course of this week.
Modi’s visit, which is built around the annual gathering of world leaders at the United Nations General Assembly in New York, will include at least one meeting with President Trump on Sunday.
“This is not going to remove all of the trade frictions between India and the U.S. — those are substantial — but it is a step in the right direction,” said Akhil Bery, a South Asia analyst at the Eurasia Group.
The framework could set the table for a finalized agreement in November, when Trump may visit New Delhi. “The trade relationship is in sharp focus right now on both sides,” said Nisha Biswal, president of the Chamber of Commerce’s U.S.-India Business Council.
The deal under consideration, according to multiple sources familiar with the discussions, could resolve some recent disputes “that have been creating some prickliness” between the two sides, as Biswal put it. The proposal would restore India’s status as a beneficiary of the Generalized System of Preferences program, or GSP, thereby lowering the price of many Indian-made goods in the United States. In exchange, Modi would agree to make it easier for American companies to work in India in a few key sectors.
“It’s likely to focus on agricultural market access, medical device pricing, and the reduction of [information and communications technology] tariffs by India,” Bery said. “India had imposed price controls on various medical devices and increased the scope of them. That formula is likely to be changed in some way to avoid a price control mechanism, which was vehemently opposed by U.S. industry.”
Trump’s trade team officials attempted to secure those agreements before the March decision to expel India from the GSP, which allows “certain products” from developing countries to enter the United States duty-free. But Trump’s decision to carry out the threat, combined with other pressures on the Indian economy, has softened New Delhi’s negotiating position.
“They are more interested and willing to address some of the concerns on the U.S. side,” said Biswal, who led the State Department’s Bureau of South and Central Asian Affairs in Barack Obama’s second term. “The Indians very much want to see GSP restored, so they recognize that they need to make some concessions to get GSP back on the table.”
The proposed framework has a narrow scope, by design. Trump’s team is eager for a success story to tout in the midst of a trade war that has punctuated an intensifying rivalry with China. Secretary of State Mike Pompeo has been working “to forge a new kind of cooperation” with India, as he put it during a June trip to New Delhi. The visit took place just days after Modi’s government had slapped retaliatory tariffs on U.S. products.
“We are working towards early resolution of trade issues,” Indian Commerce and Industry Minister Piyush Goyal said Monday. “We are in dialogue with the U.S. on a number of issues.”
Lighthizer is leading the trade talks amid a broader effort to fortify the U.S.-India relationship, as Trump’s national security team sees India, the world’s largest democracy, a partner in countering Chinese aggression. Pompeo and then-Defense Secretary Jim Mattis signed landmark security agreements last September in New Delhi. The improving trade relations with India take on extra significance in the context of a trade war with China, which some U.S. officials regard as just one part of a new “cold war” with China. A broader trade agreement with India, a country with a population of roughly 1.3 billion, could empower the United States to refuse an unfavorable bargain with China, even if the rivalry leads to the “decoupling” of the U.S. and Chinese economies that some lawmakers and analysts foresee.
“The optics and message are clear and it leverages America’s leadership to work out a trade deal with China,” International Leaders Summit co-founder Joel Anand Samy, who is organizing a U.S.-India Leaders Summit in Washington on Wednesday, told the Washington Examiner. “Importantly, if America and India can come to agreement with a combined consumer base of 1.6 billion people, then it sends a loud signal to businesses and markets that pursuing a level-playing field and calling for a fair trade deal is working.”
The two sides are setting a convivial tone for Modi’s trip to the United States. Trump will join the Indian leader for a “Howdy, Modi” rally in Houston, Texas, on Sunday. Organizers expect 50,000 people to attend the event.
“Whether a deal will be announced or not, that is up to the prime minister and the president to decide,” Goyal said, according to the Hindu BusinessLine.
