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It's stupid trade. We have so much stupid trade: US President Donald Trump

India-US trade does not seem to promise a smooth sail after May 2 deadline but full of bumps. Trump has remarked that India is charging US 100 percent for many things and asked his officials, “Will you please work on them? It's the craziest thing. It's stupid trade. We have so much stupid trade.”

But India has done well with a “very good” package to the US in the last few months. India, indeed, has not agreed to US giving animal feed to its cows on sentiment but agreed to grant market access to alfalfa hay, cherries, and pork. On the thorny issues of medical devices, India agreed to a “trade margin approach” but requested the US to wait until after the elections. New Delhi offered what is called a “mutual recognition agreement” on telecom testing.

But USTR remains unfavourable to India and it is said the US negotiators who are mainly lawyers want to ‘win’ unlike India that is for compromise. Of late, Indian negotiators appear driven to the conclusion that India will live with a withdrawal of GSP because what was on offer by India is in excess of what New Delhi receives in GSP benefits.

Until June, if the US has to accept a deal with India, it would have to be on the current package. Any other “concessions” or agreements would have to wait until the new government comes in. But the US’ deadline expires long before that.

Indian officials bristle at being labeled a “tariff king”. They point to the “World Tariff Profiles 2018” which lists some of the highest tariffs by countries, where India at 150 percent is eclipsed by Japan at 736 percent, S. Korea at 807 percent and the US at 350 percent. Speaking to TOI, senior sources said, “the trade-weighted average of MFN applied tariff for India at 7.6 percent is moderate compared to Korea and Brazil among others.” They point to India's development imperatives, the importance of balancing imports with developing its own manufacturing capacity.

 Separately, the Indian government believes that the Trump administration wants to make an “example” of India, particularly if the US and China do actually come to a trade deal in the coming weeks. India is not unique of course. The US is currently embroiled in trade flare-ups with the EU, China, Japan, among a host of other countries. That’s why India’s protestations that it has reduced the trade deficit by as much as $4 billion in 2017-18 cuts little ice in Washington.

 

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