|
||
|
TWN
Info Service on WTO and Trade Issues (Sep25/05) Geneva, 3 Sep (D. Ravi Kanth) — United States President Donald Trump on 1 September appeared to have upped the ante on India, saying that New Delhi’s offer “to cut their tariffs to nothing” has come too late. His remark came in response to the allegedly illegal unilateral 50% tariff imposed by the US on Indian goods since 27 August, according to people familiar with the development. Despite a US federal appeals court having struck down the reciprocal tariff regime under the International Emergency Economic Powers Act (IEEPA) of 1977, President Trump appears to be in no mood to abandon his seemingly coercive tactics toward countries that voice their dissent in various ways, said sources familiar with the matter. In a rather significant development, following the two-day summit of the leaders of the Shanghai Cooperation Organization (SCO) on 1 September, where they issued a strong declaration calling for the strengthening of the multilateral trading system, particularly the World Trade Organization (WTO), the White House appears to have removed the WTO from the list of international organizations that were slated to have their funding rescinded, said people familiar with the development. Earlier, the US had discontinued trade talks with India following the imposition of a 50% tariff on all Indian goods entering the American market. The 50% tariff comprises a 25% tariff imposed since 1 August under President Trump’s so-called “fair and reciprocal plan” and another 25% tariff linked to India’s purchases of oil from Russia, seen as supporting Moscow’s war against Ukraine. The combined US measures have dealt a major blow to Indian exporters. In a post on his Truth Social media website on 1 September, President Trump claimed: “What few people understand is that we do very little business with India, but they do a tremendous amount of business with us.” “In other words,” he continued, “they sell us massive amounts of goods, making us their biggest “client”, but we sell them very little – a totally one-sided relationship, and it has been for many decades.” He appeared to ignore the fact that American corporations, including pharmaceutical and services companies, make substantial annual profits in the Indian market, noted an analyst, who requested anonymity. In his continuing criticism of India, President Trump asserted: “The reason is that India has charged us, until now, such high tariffs – the highest of any country – that our businesses are unable to sell into India.” “It has been a totally one-sided disaster!” he added, emphasizing that “India also buys most of its oil and military products from Russia, and very little from the US.” Finally, President Trump claimed: “They [India] have now offered to cut their tariffs to nothing, but it’s getting late. They should have done so years ago. Just some simple facts for people to ponder!!!” At the time of writing, New Delhi has not yet commented on President Trump’s post on Truth Social. However, Indian Commerce Minister Piyush Goyal, speaking at an event hosted by the Confederation of Indian Industry on 2 August, said New Delhi is “in dialogue with the US.” His statement has raised questions about what New Delhi hopes to achieve through such dialogue at this juncture, according to people familiar with the situation. The US has imposed a 50% tariff on both India and Brazil. Brazil has responded aggressively, filing a trade dispute against the US at the WTO, while strategically reserving its right to impose retaliatory measures on American products. “The US is trying to impose on Brazil a solution that is constitutionally impossible,” said Brazil’s Finance Minister Fernando Haddad in an interview at an FT Live – Times Brasil/CNBC conference in Sao Paulo. “An impasse has been reached; it’s a request that cannot be fulfilled,” he added. In stark contrast, Prime Minister Narendra Modi’s government has seemingly remained silent, refraining from challenging Washington’s unilateral and allegedly illegal tariffs at the WTO or launching a formal trade dispute. New Delhi has shown no inclination toward imposing retaliatory measures against American products – even as it deepens strategic ties with Russia and seeks a diplomatic thaw with China. OPEN LETTER BY CIVIL SOCIETY It is against this backdrop that an “Open Letter” issued on 30 August by a broad coalition of civil society groups and eminent persons assumes significance, said analysts. The letter is being spearheaded by the Forum for Trade Justice, a network of organizations working on global trade issues, including farmers’ associations, trade unions, traders’ groups, health and environmental advocacy organizations, and activists across various domains. The letter, titled “Why India must not give in to US tariff blackmail,” states: “The Trump administration has currently slapped a 50% tariff on Indian exports to the US on both economic and political grounds, and has apparently demanded duty-free access to Indian markets in return for reducing these illegal tariffs.” According to the civil society groups and eminent persons, “the Indian government has stated that negotiations with the United States are stalled over issues related to agriculture and dairy, including genetically modified (GM) food, and that India will not concede on these matters.” While congratulating “the Indian government on this firm stand,” the letter cautions that “what may be flying under the radar are numerous systemic legal and policy issues of immense long-term importance to India’s economic interests and strategic autonomy.” These include intellectual property (IP) policies, digital-sector regulations, industrial policy, investment priorities, financial stability, and energy independence. The signatories expressed concern that “these could be compromised, even as the Indian government declares “victory” in not having relented on agriculture and dairy issues.” The Indian government reportedly extended a proverbial olive branch to the Trump administration by reducing the import duty on heavily subsidized US cotton from 11% to zero percent, said a former Indian diplomat who requested anonymity. The civil society groups and eminent persons interpret this as a climb-down in India’s position on agricultural products. They warn that even in agriculture, India may still open its markets to imports of apples, wheat, maize, soybeans, as well as dairy and poultry products from the US. The letter suggests that there could also be US demands to alter India’s Minimum Support Price (MSP) scheme, particularly for rice and wheat. “Further,” the letter states, “India may be required to grant access to GM food and animal feed from the US. Such concessions would have large-scale and long-term disruptive impacts on India’s agro-biodiversity.” While “tariffs are the most visible part of trade deals,” the letter emphasizes that “there are other, equally – if not more – important issues at stake: India’s sovereign right to make its own laws, regulations, and policies.” “It is here that deep compromises are likely to occur – compromises that could be largely permanent.” The letter also highlights the commercial deals being pushed onto India, noting that “huge commercial agreements, or abstention from deals with other countries, may be forced upon India.” The letter cautions that these commercial arrangements “should remain business-to-business or government-to- business matters, and India cannot be coerced into them.” The US imposed a 25% tariff on Indian goods effective 1 August 2025, with an additional 25% tariff taking effect on 27 August. The letter notes: “As things stand, despite our best efforts and concessions, the final tariff is unlikely to fall below 20%, or at most 15% – the rates granted to the US’s closest allies like the EU and Japan.” According to the letter, “there is no doubt that even small shifts in tariffs matter greatly to Indian exports, given that the United States is India’s largest export market. But these relatively minor adjustments cannot come at the cost of surrendering policy autonomy in critical areas.” The letter points out that “on intellectual property (IP), India may be compelled to amend its domestic patent laws to facilitate the “evergreening” of pharmaceutical patents.” “This would undermine India’s generic medicine industry, leading to a sharp rise in healthcare costs for the sick and poor,” the letter warns. More significantly, the letter appears to expose some inconsistencies in India’s claims regarding the India-UK Free Trade Agreement (FTA), which was hailed by the Indian commerce minister as a “gold standard” for future FTAs. However, under the India-UK FTA, the Indian government reportedly accepted “voluntary licensing” as the “preferred” mechanism – a move that could effectively undermine the use of “compulsory licensing” for life- saving medicines urgently needed during public health emergencies. The letter also raises concerns that “India’s efforts to leverage foreign technologies for clean energy and other sectors may be compromised through such “voluntary licensing” language.” “In the digital arena,” according to the Forum for Trade Justice, “India may be required to commit not to impose taxes on exports of US digital products. Additionally, it may have to allow unrestricted cross-border data flows and enable the sharing of government public data with US entities.” “These commitments,” the letter warns, “would eliminate the possibility of generating revenue from one of the most dynamic economic sectors and weaken India’s ability to nurture domestic digital champions, especially in artificial intelligence.” It is widely known, the letter notes, that India has already agreed in the India-UK FTA “to commit that source code disclosure cannot be mandated,” thereby weakening its regulatory authority in the evolving digital space, including artificial intelligence (AI). Even worse, “as in the UK FTA, India is likely to give up its right to enforce specific authentication standards – even in sensitive areas such as notary certification for certain documents.” “All of these measures carry serious national security implications. Such concessions would severely undermine India’s digital sovereignty – a core component of overall sovereignty – by limiting its ability to shape laws and policies in one of the most critical emerging domains,” the letter emphasized. Little wonder, then, that “in matters relating to IP and the digital arena, if India makes these compromises – as we fear it might – this would contradict India’s long-standing positions at both global and national levels,” the Forum for Trade Justice observed. India has consistently opposed the plurilateral Agreement on Government Procurement, although it has participated as an observer in the WTO’s Committee on Government Procurement for several years. The US has long been a key proponent of opening India’s government procurement market, according to sources familiar with the US demands. Against this backdrop, the letter notes that “India may be required to open its government procurement market to US suppliers on terms even more favorable than those agreed upon with the UK under the recently concluded FTA.” Moreover, “this directly contradicts the Prime Minister’s Atmanirbhar Bharat Abhiyan – an initiative aimed at making the nation and its citizens self-reliant.” The letter expresses concern that “the US is likely to demand firm commitments from India to purchase defense equipment, aircraft, and energy products from American companies.” It further states that “the US also wants India to stop buying oil from Russia, Iran, and Venezuela; exit or weaken BRICS; and abandon efforts to trade in local currencies that bypass the US dollar.” In sum, the civil society groups and eminent persons argued: “Any proposed India-US bilateral deal is less about “fair trade” and more about reshaping India’s foreign and domestic policies to align with Washington’s economic and geopolitical interests.” “It does not remotely resemble a trade agreement between two equal sovereign nations,” the letter stressed. “In its haste to meet deadlines set by the Trump administration and maintain a hardened stance,” the letter warns, “New Delhi may undermine its sovereignty – defined as the capacity to make independent policy decisions in the best interests of its own citizens.” The letter advises the Indian government to “strengthen its bilateral trade and economic relations with the US in a cooperative, trusting, and mutually beneficial environment – without ceding sovereignty.” It suggests that “in response to the “America First” trade policy, financial sanctions, and the coercive weaponization of international trade, some nations are already exploring ways to collectively preserve their economic sovereignty and transition toward a multipolar system.” Noting that “India has been convening the Voice of the Global South Summits since 2023,” the letter urges New Delhi “to proactively support such initiatives within BRICS+ and other multilateral forums.” Furthermore, the Indian government must “immediately engage with parliamentary committees, state governments, regulatory bodies, farmers’ unions, civil society groups, and other stakeholders to seek their inputs and suggestions on ongoing FTA negotiations.” In the current negotiations, the letter warns, “India’s interests will not be safeguarded by subservience. Instead, they will be served by resoluteness, firmness, and a clear focus on long-term economic prospects, developmental goals, and ecological security.” “Our negotiators must thoroughly brief Prime Minister Modi on the key issues. This will help ensure that President Trump does not further skew any final agreement – already negotiated at the official and ministerial levels – against India’s national interest.” +
|
||
