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Details yet to be drawn, no final word on limited Indo-US trade deal

Fresh speculations about disagreements have gathered pace, as US Trade Representative Robert Lighthizer, who was widely expected to come before Trump to finalise the broad contours of the deal, hasn’t landed here yet, with no clarity on his arrival.

By: ENS Economic Bureau | New Delhi | Updated: February 17, 2020 3:28:29 am
Prime Minister Narendra Modi, US President Donald Trump, Trump India visit, Trump in India, US India trade ties, US India trade talks Donald Trump will visit India on February 24. (File)

Persisting differences on sticky issues — including Washington’s demand for greater access to agriculture, dairy and ICT products, have cast a shadow over the prospect of a limited trade deal being signed during US President Donald Trump’s two-day visit to the country, starting February 24.

Fresh speculations about disagreements have gathered pace, as US Trade Representative Robert Lighthizer, who was widely expected to come before Trump to finalise the broad contours of the deal, hasn’t landed here yet, with no clarity on his arrival.

Importantly, the US last week reportedly changed a key exemption to its trade remedy laws to make it easier to penalise several developing countries, including India and China, in the latest move to underscore its anxieties over New Delhi’s trade policies.

While the quantum of incentives involved in the deal is unclear, it was initially expected to cover products with a total bilateral trade of over $10 billion. The limited deal was supposed to be signed during Prime Minister Narendra Modi’s visit to the US in September last year but a lack of consensus had then stalled it.

Both the countries haven’t yet reached a consensus on the US demand that India scrap an up to 20 per cent duty on seven ICT products, including mobile phones worth over Rs 10,000 and smart watches. Nevertheless, India has strived to narrow the stark differences through hard negotiations over the months.

New Delhi has already conveyed that while an across-the-board cut of import duties on the seven items would cost it a massive $3.2 billion a year and help only third parties (like China and Korea) that supply more, it is willing to lower duties on those ICT products where it would benefit the US. The US made up for only 2 per cent of the Indian imports of the seven products in FY18.

As part of the initial deal, India is learnt to have agreed to sweeten its offer on the price control regime for medical devices and apply trade margin on coronary stents and knee implants at the first point of sale (price to stockiest), instead of imposing it on the landed prices, as was planned earlier.

Last month, Commerce and Industry minister Piyush Goyal had held a meeting with Lighthizer in Davos, where both are learnt to have discussed the deal.

For its part, India is pitching for an exemption from the extra duty imposed by the US on steel (25 per cent) and aluminium (10 per cent) and a complete restoration of duty-free export benefits for some Indian goods under the Generalised System of Preferences. FE

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