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Commerce minister Suresh Prabhu (left) with US trade representative Robert Lighthizer at the 11th US-India trade policy forum platform in Washington on 26 October 2017. Photo: twitter@ustraderep
Commerce minister Suresh Prabhu (left) with US trade representative Robert Lighthizer at the 11th US-India trade policy forum platform in Washington on 26 October 2017. Photo: twitter@ustraderep

Have India US trade ties entered an uncertain phase?

India and the United States have failed to bring out a joint statement after the US-India trade policy forum talks between Suresh Prabhu and Robert Lighthizer

India and the US have failed to bring out a joint statement under the trade policy forum (TPF) dialogue due to unresolved differences indicating the trade relationship between the two strategic partners may have entered a phase of uncertainty under the Trump administration.

In the first high-profile engagement on trade between the two countries after President Donald Trump won the US presidential elections in November last year, India’s new trade minister Suresh Prabhu visited the US to hold back-to-back annual trade talks under the TPF and commercial dialogue on Thursday and Friday respectively. While the two sides brought out a joint statement after talks under the commercial dialogue, there was no joint statement after the more important TPF talks. Instead, both sides published press releases depicting their side of the story.

The USTR (US trade representative) was more forthcoming about the differences between the two sides: “Across many of these areas, both sides had differing views that could not be resolved immediately. There was agreement that it is critical to continue strong engagement over the coming months in order to achieve concrete outcomes before the next TPF."

The USTR in the statement said that it pressed for strong outcomes across a number of areas, including non-science-based barriers to agricultural trade, continuing and new regulatory and technical barriers to trade that impact sales of US high technology and other products, tariffs in a number of agricultural and industrial sectors, market access in services, and protection and enforcement of intellectual property rights. “Ambassador (Robert) Lighthizer also expressed concern about the $29.6 billion US trade deficit with India, urging the Indian delegation to further liberalize the Indian economy to facilitate American exports," it said.

The Trump administration thinks the large trade deficit of the US with India is due to discriminatory trade barriers against its companies while India maintains it conducts its trade policy in a non-discriminatory and transparent manner.

Trump, during his meeting with Prime Minister Narendra Modi in June, also urged him to do more to relax trade barriers. “It is important that barriers be removed to the export of US goods into your markets and that we reduce our trade deficit with your country," he had said, seeking a trade relationship that is “fair and reciprocal".

An Indian commerce ministry statement said Prabhu responded to US concerns by noting that US and Indian exports to each other’s territory have been growing at the same pace and any issue of trade deficit has to be viewed in the larger context of the growing economic and strategic partnership between both countries.

“In this context, he pointed out that India has already started to import crude oil and new Liquefied Natural Gas exports are expected to commence early next year. Indian aviation companies such as Spicejet and Jet Airways have placed orders for over 300 aircraft valued at several billions of dollars," the Indian commerce ministry statement said.

The USTR also expressed concern over price controls by India in medical devices. India’s drug pricing watchdog had earlier this year substantially cut prices of cardiovascular stents and knee implants in public interest.

Prabhu responded by making a strong pitch for the need for India to bring about a reconciliation between the demand for optimum medical facilities and affordable healthcare for its citizens.

“India desires to address the concerns of providing affordable health care to its citizens and balancing it with the need to introduce high end technology. He encouraged American companies and manufacturers of medical devices to establish manufacturing facilities in India," the Indian press statement said.

The joint statement after the commercial dialogue said while acknowledging significant areas of progress in the commercial relationship, both principals also shared “candid feedback" on a range of market access issues that can be addressed to expand trade and investment opportunities. “Secretary (Wilbur) Ross highlighted the potential to enhance trade by lowering tariff and non-tariff barriers and committing to the use of international standards," it said.

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