India and US Close to Finalizing Trade Deal, Minister Says

The day the US finds appropriate tools and legal backing that gives India a tariff advantage over its competitors, the trade deal between the two countries will be finalised, Commerce and Industry Minister Piyush Goyal said on Thursday. “Until the framework for getting that competitive advantage can be finalised, we cannot Enter Into Force (EIF) the US deal,” he said at the India Global Forum in London. The minister’s comments came a day after he completed two-day talks with the US Trade Representative (USTR) Jamieson Greer where both sides discussed details of the interim trade deal steps to advance the Bilateral Trade Agreement (BTA). The minister said that the deal with the US was struck on February 6 and broad contours were fixed at that time. “Our teams have been working since then to finalise the fineprint. There is always a little give and take. We are very close to the deal.” He said the trade agreements are about getting a comparative advantage over the competition and the deal both sides had agreed to for bringing down tariffs on India to 18% from 50% had delivered that. In the February framework agreement India’s tariffs were lower than Bangladesh, Sri Lanka, Taiwan and Vietnam who faced 20% tariffs while Pakistan, Indonesia, Malaysia, Thailand, Cambodia and the Philippines were at 19%. However, before the formal agreement could be signed the US Supreme Court invalidated the reciprocal tariffs leading to reopening of the negotiations. “With the US Supreme Court striking down the reciprocal tariffs and now with 10% tariffs that expire on July 24, we obviously have to have some reason to be able to bring the agreement that we had agreed upon into force,” Goyal said. In the two days of talks ministerial level talks between India and US discussions focused on pathways to conclude an interim agreement. Over multiple sessions both sides also discussed the core elements of BTA like enhanced market access, digital trade, supply chain resilience, reduction of non-tariff barriers, and expanded cooperation in strategic sectors. This was the first meeting between USTR and the Commerce Minister since February when both sides agreed to a framework of an interim trade deal. Other than the headline tariffs, India is also seeking clarity on the future action that might follow based on the two investigations under Section 301 of the Trade Act against its trade partners. After the conclusion of one investigation on the use of imported inputs made from forced labour for manufacturing goods for export to the US market, the US has proposed 12.5% additional tariffs on India. Another Section 301 investigation on excess manufacturing capacities is ongoing.