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Info Service on WTO and Trade Issues (Mar25/03) Geneva, 10 Mar (D. Ravi Kanth) — United States President Donald Trump on 8 March announced that India has agreed to “cut their tariffs way down”, while making some rather disparaging remarks that New Delhi has finally been exposed for what it has allegedly done. They (India) have agreed to “cut their tariffs way down now because somebody [the US] is finally exposing them for what they have done,” he said in his remarks at the White House. President Trump’s statements have seemingly caused a political storm in India, with the opposition Congress Party criticizing Prime Minister Narendra Modi. Prime Minister Modi is only interested in “tareef” (a Urdu word meaning “praise”) and “not concerned about tariffs,” according to Congress Party spokesperson Jairam Ramesh, as quoted in a news report in The Economic Times on 7 March. However, a senior official from the Indian commerce ministry reportedly said that it is too early to say anything at this juncture as negotiations are still ongoing on the proposed bilateral free trade agreement with the US. The Indian trade minister, Mr Piyush Goyal, held meetings with the US commerce secretary Howard Lutnick and the US Trade Representative (USTR), Jamieson Greer, last week. While the Indian trade minister did not share any details of his consultations with the two senior US officials, it has become somewhat clear from President Trump’s comments that India has signaled its intention to lower its tariffs. Addressing the India Today Conclave on 7 March, US commerce secretary Lutnick said the goal is to reach an arrangement under which India must change its tariff regime. “It is now time for reciprocal policy and time to rethink the special relationship between India and the US,” Lutnick said, adding that India also needed to step out of the model it has been following, according to a report in The Economic Times on 7 March. The US commerce secretary said the focus is on the bilateral conversation between India and the US, adding that India had to bring down its tariffs and protections. “Your protections are for the world but you need to bring it down for the US [on a zero-for-zero framework]. We need to have a macro-level trade agreement and not just on certain products like bikes and bourbon. Modi can do things, he has a great relationship with Trump,” said Lutnick, according to the report in The Economic Times. But concerns are growing among farmers and other lobbies in India such as Swadeshi Jagran Manch (SJM), an economic advocacy group which is close to the Indian ruling party. Commenting on how India was handling President Trump’s reciprocal tariff threats, Professor Ashwani Mahajan, the co-convenor of SJM, said that the Indian government should and will “vouch for the interests” of domestic players, according to a news item posted by the Sputnik India news agency. According to Mahajan, for some time now, the Indian government has been of the view that “bilateral trading pacts are much better than multilateral frameworks.” “For instance, World Trade Organisation’s (WTO) most-favoured nation (MFN) status calls for affording this advantage to all countries under the non-discriminatory trading regime, which might not always be in our interest,” Mahajan explained. President Trump’s reciprocal tariff threat could put the entire WTO framework in danger, he said, adding that the US President saw tariffs as a “legitimate tool of public policy.” “Imposing unilateral tariffs is very much against the WTO rules and framework. Secondly, other countries could also take a cue from Trump’s trade policy and levy similar tariff barriers,” Mahajan said, a point which other industry experts have also made to Sputnik India in previous interviews. Mahajan stated that it was in the sphere of agriculture that India should exercise the maximum caution, given the fact that the sector employed almost 50% of the Indian workforce. “I don’t believe India should cede to US demands to open up our market to American agricultural products. The US gives much more subsidies than India to its farmers. So, the playing field is not level to begin with,” Mahajan said. He stressed that defending the interest of the Indian farmer was of “paramount importance” for Prime Minister Modi, describing the government’s position as “non-negotiable” in the sector. INDIA-EU TALKS Meanwhile, India is expected to restart the stalled bilateral free trade agreement negotiations with the European Union on 10 March. A fortnight ago, a high-level team of senior EU officials, including the President of the European Commission, Ms Ursula von der Leyen, visited New Delhi seeking a trade and defence pact with India, according to media reports. Earlier, the bilateral free trade agreement negotiations between the EU and India remained stalled due to unbridgeable differences over market access, social issues including human rights, and trade and environment issues. Given the emerging hostilities with the US, with President Trump’s proposed tariffs on EU automobiles to be announced any time soon, the EU appears to be adopting a course correction, Mr Rajiv Kher, the former Indian commerce secretary and chief negotiator, told SUNS last week. Asked why the talks broke down with the EU the last time in 2013, Mr Kher said “in the days when we were negotiating, the outstanding issues were largely on market access.” “So, on the EU side”, he said, “it was market access dealing with automobiles, auto components, wine, cheese, and so on.” There were other regulatory issues like the General Data Protection Regulation, he said, adding that even in the area of sustainable development, the two sides had fundamental differences. But this time around, according to Mr Kher, the EU’s carbon border adjustment mechanism (CBAM) will likely be a huge irritant as it could pose a major threat to several industries, particularly iron and steel. +
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