In a first, USTR Jamieson Greer heads to India on June 23 to give ‘final touch’ to trade deal

This is the first instance when the US trade chief is expected to visit India since the negotiations for a trade deal began in February last year. The US trade team to India for nearly half a dozen rounds of talks were headed by Brendan Lynch, Assistant United States Trade Representative for South and Central Asia. However, Greer has been part of the trade delegation during negotiations with the EU and China.

The talks come amid a lingering US Section 301 investigation on India’s industrial overcapacity, which could result in additional tariffs on top of the 12.5% announced for the importation of goods produced using forced labour. Both these tariffs could come into effect next month and serve as the basis of a trade deal.

As India and the US inch closer to an agreement, trade data showed that bilateral trade is undergoing significant changes. While exports to the US in April and May surged by less than 1% to $17.29 billion, imports registered a sharper jump by 19.40% to $11.14 billion compared to April and May last year.

Commerce Secretary Rajesh Aggarwal pointed out that India has significantly increased energy imports. Trade data also shows that the bilateral trade gap between the two countries has been shrinking.

Meanwhile, the ongoing US trade investigation has been a concern for the industry and foreign investors. Section 301 of the US Trade Act of 1974 gives Washington sweeping powers to not only impose tariffs but also authority to impose non-tariff barriers, which can restrict Indian exports to the US beyond goods.

Deborah Elms, Head of Trade Policy at Hinrich Foundation, has said that the Section 301 could have a firmer legal standing and tariffs imposed could reach any level as long as the required procedures are followed. USTR started the investigation in March and has come out with the findings after the required duration. It has also allocated time for public comments.

“The courts, if asked to examine the use of Section 301, are likely to give the President wide deference as long as the required procedures are followed. Recall that the law provides maximum timelines, not any minimum. Past cases were often narrowly targeted. Future cases need not be so constrained. Tariffs may be part of any retaliatory package, set to any level, alongside a wide range of other actions to address the charge of unfair trade practices,” Elms said.

Demands relating to market access for American agricultural products have been one of the biggest pressure points. The India-US joint statement said that India will eliminate or reduce tariffs on all US industrial goods and a wide range of US food and agricultural products, including dried distillers’ grains (DDGs), red sorghum for animal feed, tree nuts, fresh and processed fruit, soybean oil, wine and spirits, and additional products.

Indicating signs of disagreement, the US later revised a factsheet softening its claims about the gains it had secured from New Delhi and entirely dropping a section on digital services taxes. The earlier version of the factsheet said India had “committed to” buying more American products and purchasing “over $500 billion of U.S. energy, information and communication technology, coal, and other products”. The updated factsheet, as well as the joint statement, tempered the wording from “committed” to “intends”.