What are the major points hindering better trade relations between Washington and New Delhi?
the story So Far: This week US Trade Representative Catherine Tai and India’s Minister of Commerce and Industry Piyush Goyal Co-chaired the US-India Trade Policy Forum, which was revived after a gap of four years. to solve To take economic relations to the “next higher level”The two sides exchanged views on ‘potential targeted tariff reductions’ and decided to activate the Forum’s working groups on agriculture, non-farm goods, services, investments and intellectual property.
What is the agreement on digital services?
The two countries said that they have reached an agreement on the transition from the existing Indian Equalization Levy on digital services as part of the new multilateral tax solution under the OECD/G20 inclusive framework. This, the US Treasury Department said, would allow the US to end measures adopted in response to the Indian equities levy.
editorial | Breaking the ice: On India-US trade ties
Why is the resumption of trade talks important?
The decision to restore the Trade Policy Forum and activate working groups augurs well for trade relations to the extent that the two sides now have a time to capture their differences, determine their position and work towards a negotiated settlement. There is a system for Its aim is to reach solutions to many controversial issues.
What are the major issues that weaken the relationship?
A February 2020 article by Alyssa Ayers of the New York City-based Council on Foreign Relations, titled ‘A Field Guide to US-India Trade Tension’, lists eight key areas of disagreement. The newest, and in many ways one of the most significant, has been the size of the trade deficit that the US faces in its trade relationship with India, an issue that the Donald Trump administration has considered a central element of its approach as a whole. Made it. business policy. To reduce the deficit, which stood at about $23.5 billion for merchandise trade with India in 2019, the Trump administration in 2018 imposed new tariffs on steel and aluminum imports from several countries, including India. In return, the Indian government announced retaliatory tariffs, which were later triggered after the US removed India from the list of developing countries eligible for preferred access under its Generalized System of Preferences (GSP). The hike in tariffs is still on, and on India’s stand demanding the reinstatement of the GSP, the US has sought to decide on the decision of its lawmakers in Congress.
Other major sticking points are related to agricultural products, an area where differences appear most adamant and permanent over time, including US demand for market access for its dairy products, and intellectual property rights, which are again the oldest is one of the sources. confrontation. It baffles the US for placing India first on its ‘priority watch list’ of countries with serious deficiencies in protecting the IPR under its special 301 report. Other issues are investment barriers, Indian price controls on medical devices, the digital economy and its related taxation issues, and crucially for New Delhi, the US approach to visas for India’s professionals and skilled workers in the service sector.
How have both sides tried to reduce friction?
India’s decision to join the OECD/G20 inclusive framework on adopting a common multilateral approach to taxation has helped address one of the hurdles: the need to shift the equalization levy imposed on e-commerce transactions over time. The decision of the government gives the American side. Room to roll back or substantially reduce some of the tariffs raised as a response. The ministerial talks took some decisions to ease access to select agricultural products from both sides. Separately, India has adopted a trade margin rationalization approach to price regulation on certain medical device products as a means of protecting the interests of both consumer and supplier, and this has been acknowledged by Washington.
,