US-India Trade Deal: Negotiating Conflicting Perspectives

Even as the timelines for the Indo-US trade deal draw near (an interim agreement is expected before July), sensitivities have appeared in the relationship, with disagreements on agricultural tariffs risking the 9 July deadline, after which 26% tariffs will be applied on Indian exports.

- Dr. Amitayu Sengupta

This follows the standoff at the WTO, where India has suggested countermeasures following the USA's rebuttal of India's formal notice. This episode is part of the long history of both countries not seeing eye to eye on issues of trade, especially at the WTO.

India was a proactive architect of the G33 back in 2003, which argued for 'special products' exemption and 'special safeguard mechanisms' to protect the interests of developing economies under the Agreement on Agriculture (AoA). This was perceived by the USA as an attempt to undermine US interests at the WTO. Similarly, while the USA has been promoting plurilateral deals, India has consistently argued that they undermine the multilateral ethos of the WTO. India did not sign the plurilateral Government Procurement Agreement (GPA) as public procurement is a critical tool for social development. For instance, India in the past leveraged its public procurement mechanism to boost the Make in India programme, which would not have been feasible under the GPA.

Agricultural products are a major category on which the present trade talks are stuck. Historically, it has been a sector in which both countries have often had differing positions. While both the USA and India give considerable domestic-level subsidies in agriculture under the different WTOapproved provisions, the USA argues that India's MSP-based public procurement is market-distorting, especially given that India is a major exporter of rice. FCI procurement is an essential mechanism for food security and inflation control in a developing economy like India. No wonder, then, that India, China and other developing nations have always pushed back against attempts to curtail domestic support measures in agriculture.