The United States of America cannot seem to make up its mind regarding how to handle its international trade relationships, particularly with India. Following a high-level meeting between US Commerce Secretary Wilbur Ross and Indian Commerce Minister Suresh Prabhu earlier this week, the two nations released a joint statement promising to “deepen economic cooperation and bilateral trade by ensuring greater cooperation between stakeholders”. To observers, it appeared that the Indo-US trade relationship was finally on the mend following months of tension between the two after the US decision to withdraw Generalized System of Preferences (GSP) benefits to Indian goods. In an interview to CNBC TV-18, Secretary Ross even said that the US might consider reversing the withdrawal of GSP “if the situation permits”. However, in the same interview, Ross also took a pointedly opposing tone, warning India against imposing retaliatory tariffs in response to the GSP withdrawal. Saying that such tariffs would not be “appropriate” under WTO rules, Ross made it clear that their imposition would worsen trade relations between India and the US. Talk about conflicting perspectives. Given the USA’s seesawing on the issue, India is also pushing to expand trade with rival economy China. Commerce Ministry officials met Chinese delegates to push for more Indian exports and narrowing of trade deficit with China. While the meeting failed to result in any conclusive agreements, it’s a sign of the task awaiting the new government, expected to be sworn in at the end of this month. Ministry officials have already started pre-budget work in anticipation of the new government’s needs.
Trade Update
11TH MAY
# 24
India and the US on 6th May agreed to engage regularly at various levels to resolve outstanding trade issues by exploring mutually beneficial suitable solutions, an official statement said. “Both sides agreed to deepen economic cooperation and bilateral trade by ensuring greater cooperation amongst stakeholders, including Government, businesses and entrepreneurs,” said a statement after a meeting between visiting US Commerce Secretary Wilbur Ross and Commerce Minister Suresh Prabhu.
The US could reverse the decision of withdrawing trade concessions to India under the Generalised System of Preferences (GSP) if the situation permits, US Commerce Secretary Wilbur Ross said on 7th May. Ross told CNBC-TV18 that the decision could be reversed if India addresses the issues raised during the negotiations. Speaking at the Trade Winds Conference, Ross said, “India is already the world’s third-largest economy, yet it is only the US’s 13th-largest export market, due to overly restrictive market access barriers.”
Any retaliatory tariff by India in response to the United States’ planned withdrawal of trade privileges will not be “appropriate” under WTO rules, US Commerce Secretary Wilbur Ross warned on 7th May. The comments, made to broadcaster CNBC-TV18 during a trip to India’s capital, come as trade ties between the United States and China worsen. The US is India’s second-biggest trade partner after China. India’s new e-commerce rules could hurt future investments by the US in the South Asian country, Ross said, even as he said he was hopeful that US firms would win defense deals from India in future.
India’s trade deficit with China has been bridged by about $9.5 billion in FY19 to $53.5 billion, but New Delhi wants deeper cuts this year. Pushing for more action from the Chinese side to increase imports of agricultural commodities and certain other goods from India, Commerce Ministry officials met representatives from the General Administration of Customs of China (GACC) on 9th May in New Delhi to discuss ways to raise exports and close the bilateral trade gap further.
The Central government has kick-started the pre-budget exercise, with ministries preparing their budget wish lists, even as the nationwide elections are underway. However, this is a planned exercise as the permanent bureaucracy knows that once the new government is in place, it will be in a hurry to place a budget before the parliament and get it passed. “We need to keep background papers ready for whichever government that swears in after elections; ministries have been asked to keep their papers ready,” said a top official.
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