NEW DELHI: The U.S. has begun the new year in India on a strangely absent note: a new ambassador has yet to move into Roosevelt House (although Los Angeles Mayor Eric Garcetti is expected to win Senate approval soon); there’s no word on the next 2+2 dialogue (of defence and foreign ministers) to be held in Washington and there’s evident reluctance within the Biden administration to go full steam ahead on negotiations for a free trade agreement.
To be sure, Delhi does not see this negatively; rather the India-U.S. relationship is regarded as among the most comprehensive of its kind given ongoing dialogue on a range of issues. At its base is the strong people-to-people relationship symbolised by a dynamic diaspora and politicians from across the political aisle endorsing support for India. But while there’s no looking back, Indian diplomats acknowledge a “complexity of issues” that require careful navigation.
The 2+2 dialogue will be held once Washington greenlights it, perhaps in March. While it has not been flagged before, India may face searching questions on its Atmanirbhar policy, especially the latest rules that further tighten restrictions on imports of foreign weapons and platforms. While India will have a ready answer that there’s no bar on U.S. companies investing in India, there may be complaints about Russia re-emerging as India’s top weapons supplier.
On trade, despite some optimistic projections from Delhi, “there may be no appetite in Washington for a free trade agreement with India,” said a source.
Recall President Biden’s emphatic statement last April: “I am not going to enter any new trade agreement with anybody until we have made major investments here at home and in our workers.” It reflected a widespread view that agreements such as NAFTA (North American Free Trade Area) have resulted in production shifting to Mexico with consequent loss of jobs in the United States.
That apart, the U.S. is pushing environment and labour issues in the WTO, which India sees as distinctly non-trade matters. The U.S. is also claiming the use of forced labour in negotiations over fisheries, which could be the thin end of the wedge linking human rights to trade laws.
Incidentally, India is no longer fixated on GSP (Generalized System of Preferences) that allowed certain goods duty-free entry into the U.S. market. The U.S. suspended GSP in 2019 after the Trump administration determined that India was not providing equitable and reasonable access to its markets. Since the benefit from GSP in 2018 amounted to just about $280 million in a total trade at that time of around $51 billion, Indian negotiators preferred to look for bigger gains elsewhere.
There’s been a breakthrough in two areas: after the visit of Katherine Tai, U.S. Trade Representative to Delhi last November, the Trade Policy Forum dormant since 2017 has been revived. It is a bilateral dialogue mechanism that was able to resolve a long pending U.S. demand that India buy its pork products.
On another positive note, the U.S. will again open its markets to Indian mangoes and pomegranates while India will do likewise for U.S. cherries and alfalfa hay (a high protein feed for cattle). More products could be added as the Omicron wave subsides and the commercial dialogue picks up pace. But the FTA may have to wait for sunnier times.
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