US commerce secretary says Modi has a strong position, making it a lot easier to take decisive action
The interim trade agreement was expected to cover tariff-related concessions
US commerce secretary Wilbur Ross on Thursday said there was “no structural reason" why there can’t be a trade deal with India quickly, though he differed with trade minister Piyush Goyal on India’s e-commerce policy.
Speaking at the India Economic Summit organized by the World Economic Forum, Ross, however, said that neither country had said that a trade deal will be signed in “5 minutes". He was referring to expectations that US President Donald Trump and Prime Minister Narendra Modi could announce a limited trade deal during their meeting either in Houston or in New York last month.
“Pre-election, there was undoubtedly some constraints on India to deal with certain matters. Now that the election has come and gone and Prime Minister Modi has a very clear strong position in Parliament, it should be a lot easier to take decisive action," Ross said.
Despite the seeming bonhomie between Trump and Modi, India-US trade relations have been fraught of late, especially after Washington withdrew zero-duty benefits worth $6 billion to Indian exporters, and New Delhi responded with retaliatory tariffs on 29 products imported from the US.
The limited or interim trade agreement was expected to cover tariff-related concessions for US farm products, pricing of pharmaceutical products such as stents and knee implants, and information and communication technology products in return for restoration of duty-free benefits for Indian exporters.
Goyal said a trade deal has to keep in mind local factors and multilateral commitments. “On certain issues, there can be a difference of opinion between the two countries," he added.
The US has been highlighting its rather minuscule trade deficit of $16.9 billion with India, often putting it on the same pedestal as China with whom it has a trade deficit of $419 billion. The US commerce secretary clarified that the Trump administration was concerned about the trade deficit relating to artificial and protectionist barriers and is not borne out of comparative advantage. Ross said while he was aware of the difference in degree of trade deficit the US has with China and India, it does not mean the US should not be dealing with unfair practices with other countries even if they result in smaller trade deficits.
“Most of the things we are requesting from India would not only help US, a lot of these would also help India itself. India, for example, has a wonderful opportunity right now to take advantage of trade dissension elsewhere," he added.
Ross said that during his closed-door bilateral meeting with minister Goyal he would share the areas where China is a big exporter to the US and the possible ways India can take advantage of it in changing that mixture.
“We are not just focusing on deficit. We are focusing also on total trade," he said.
On e-commerce policy, Goyal clarified that the Indian government was very clear that it can’t allow small retail with 120-130 million people dependent on it to die. “E-commerce is a platform that provides opportunity to buyers and sellers in an agnostic fashion. It is not expected to be a platform for predatory pricing," he added.
However, taking a contrarian view, Ross said if 100 years from now, India still has as many small retailers as now, it would have held back the growth of the country immensely. “It is a question of proportionality, timing and balancing," he added.