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TWN
Info Service on WTO and Trade Issues (May25/09) Yerevan, 23 Apr (D. Ravi Kanth) — United States Vice President J D Vance on 22 April seemingly strongly praised India, saying that “he wants to build the future with our partners all over the globe” while simultaneously seeking greater market access to its markets for US products ranging from agriculture, pharmaceuticals, energy to defense hardware, in a development that could drastically tilt the balance of trade in favour of the US, according to several commentators. “Trade relations must be based on fairness,” he said during a visit to Jaipur on 22 April, after holding talks with the Indian Prime Minister Narendra Modi on 21 April. It is not clear whether India will decouple from China as part of the Trump administration’s alleged move to isolate China from its supply chains. In contrast, the European Union on 22 April stated that it will not decouple from the Chinese economy as a condition for reaching a trade deal with the Trump administration, amid reports that the White House has asked countries to do exactly that. Although the US has not officially confirmed its demand, US President Donald Trump has sounded amenable to making nations choose between Washington and Beijing in order to win permanent concessions from his sweeping reciprocal tariffs, which have shocked allies and adversaries alike, reports suggested. VANCE LAUDS INDIA “In our meeting yesterday (21 April),” Vance touted that “Prime Minister Modi and I made very good progress on all of those points, and we are especially excited to formally announce that America and India have officially finalized Terms of Reference for the trade negotiation,” adding that he thinks that “this is a vital step.” While rebuking the critics of President Trump’s trade policies, Vance said, “He (Trump) seeks to re-balance global trade so that America, with friends like India, can build a future worth having for all of our people together.” However, President Trump’s allegedly unilateral reciprocal tariffs have caused turmoil in the global markets, with countries already paying for the baseline tariff of 10% imposed unilaterally by the US from 5 April. Besides, Indian auto parts companies are already subjected to a 25% tariff while the Trump administration has reportedly stated that it is soon going to impose a specific tariff on pharmaceutical products entering the US market. Besides, under the allegedly unilateral reciprocal tariff regime, Indian goods could be subjected to a 26% tariff if there is no change after the 90-day pause announced by President Trump earlier. At present, the reciprocal tariffs are being paused due to the unprecedented turmoil they had caused over the past 15 days. Reports suggest that the US stock and currency markets are experiencing the worst downturn since the Great Depression. “The Dow Jones Industrial Average shed almost 1,000 points on Monday and is headed for its worst April performance since 1932, according to Dow Jones Market Data,” said the Wall Street Journal (WSJ) in a report on 22 April. More importantly, the US and India seemingly glossed over several systemic and structural disparities existing between the two economies. The two sides did not mention whether the path they are adopting for the bilateral free trade agreement is one among seemingly unequal countries, with the Indian per capita income being around $2,400 while the US per capita income hovers around $75,000, said people familiar with the development. However, the US Vice President went on to tout the importance of finalizing the so-called terms of reference (ToR) for the agreement, emphasizing it as “a vital step toward realizing President Trump’s and Prime Minister Modi’s vision, because it sets a roadmap toward a final deal between our nations.” “I believe there is much that America and India can accomplish together,” Vance said. Criticizing the past US administrations, Vance said, “Past administrations in the United States of America … motivated by a fear of the future, have tied our hands and restricted American investments in oil and natural gas production.” “This administration recognizes that cheap, dependable energy is an essential part of making things,” the Vice President said in an apparent attempt to sell US petroleum products. “Of course, America is blessed with vast natural resources and an unusual capacity to generate energy, so much that we want to be able to sell it to our friends, like India,” he said. “We believe your nation will benefit from American energy exports, and by expanding those exports, you’ll be able to build more, make more and grow more, but at much lower energy costs,” he claimed, adding that “we also want to help India explore its own considerable natural resources, including its offshore natural gas reserves and critical mineral supplies. We have the capacity, and we have the desire to help.” While strongly criticizing India over non-tariff barriers and President Trump declaring it a “tariff king”, Vance said he has a suggestion to make: “One suggestion I’d have is maybe consider dropping some of the non-tariff barriers for American access to the Indian market.” Given the seemingly opaque negotiations that are currently taking place to finalize the proposed bilateral free trade agreement with the aim of doubling bilateral trade to $500 billion by 2030, fears are growing in several Indian sectors that the Modi government is under pressure to agree to sweeping market access concessions in various areas. Already, the Modi government has given market access for several American agricultural products, including from bourbon whiskey to cotton, according to various media reports. Vance expressed the Trump administration’s delight over “the Modi government’s budget announcement to amend India’s civil nuclear liability laws, which currently prevent US producers from exporting small modular reactors and building larger US design reactors in India.” “There’s much that we can create, much that we can do together,” he said, emphasising that, “We believe that American energy can help realize India’s nuclear power production goals, and this is very important, as well as its AI ambitions.” Mixing trade with defence cooperation, Vance said the two countries laid the foundation for closer collaboration, adding that “from Javelins to Striker combat vehicles, our nations will co-produce many of the munitions and equipment that will need to deter foreign aggressors, not because we seek war, but because we seek peace, and we believe the best path to peace is through mutual strength. And launching the joint autonomous systems industry alliance will enable America and India to develop the state-of-the-art maritime systems needed for victory.” “Growing relations between our countries over the last decade are part of what led America to designate India a major defence partner, the first of that class,” Vance said. Meanwhile, in a news report published in the Financial Times on 22 April, it is suggested that the Trump administration is pressuring the Indian government to provide American online retail giants – Amazon and Walmart – full access to India’s $125 billion e-commerce market, as part of a trade deal being negotiated under the threat of tariffs. According to the FT report which quoted unnamed Indian industry executives, “the US plans to push Prime Minister Modi’s government for a level playing field on e-commerce in wide-ranging talks on a US-India trade agreement set to also cover sectors from food to cars.” At present, India allows American companies to operate only as online marketplaces for others to sell their products. Indian companies are allowed to produce, own, and sell goods through their platforms. The US, however, views the treatment meted out to Amazon and Walmart by the Indian government as a “non- tariff barrier” as well as a limit on foreign direct investment in retail, the FT report suggested. According to the FT report, the US retail giants have been trying hard since 2006 to gain access to the Indian e-commerce market but with little success. +
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