The US and India are unlikely to reach a limited trade deal during US President, Donald Trump’s first official visit to India next week. On Thursday, February 20, 2020, Trump said in his commencement address at the Hope for Prisoners Graduation Ceremony in Las Vegas, “We’re going to India, and we may make a tremendous deal there.” Meanwhile, the US President also mentioned that such a trade deal would be possible after the 2020 US presidential election to be held in September this year.
Trump’s Statements on Thursday
In Las Vegas on Thursday, citing a prospect for a trade deal with Indian Prime Minister (PM) Narendra Modi, Trump made a statement on Thursday about a “tremendous” trade deal between the two countries. Meanwhile, Trump also added, “Maybe we’ll slow it down, we’ll do it after the election… So, we’ll see what happens, but we’re only making deals if they are good deals because we are putting America first.”
Examining the Trump’s statement, Nisha Biswal, president of the US-India Business Council (USIBC), told reporters that it was unlikely for New Delhi and Washington to forge a potential trade deal during Trump’s visit to India. Biswal added, “We’re still hopeful that some kind of agreement could be reached, but we do recognize and acknowledge that both governments have been indicating that is unlikely at this juncture.”
According to a source, USIBC members and its associated companies were expecting to come up with a trade negotiation that could lead to a “confidence-building” between the two countries in the future.
Meanwhile, Biswal also shared a view that a key American commercial association, the US Chamber of Commerce, had been putting pressure on the Trump administration to “stake out a framework” for how the world’s two largest democracies could grow their trade and investment opportunities.
Existing US-India Trade Relations
Currently, the volume of US-India bilateral trade in goods and services is about 3% of the US’ global trade which means India is now the United States’ eighth-largest trading partner among the world’s largest economies. According to the Council on Foreign Relations (CFR), the US-India trade in goods and services had surged to $142 billion in 2018 from $16 billion in 1999.
As Alyssa Ayres, a senior fellow for India, Pakistan, and South Asia at the Council on Foreign Relations, said, “India’s trade with the United States now resembles, in terms of volume, the US trade with South Korea ($167 billion in 2018) or France ($129 billion).”
In a recent report, the Congressional Research Service (CRS) said, “The Trump Administration takes issue with the US trade deficit with India, and has criticized India for a range of ‘unfair’ trading practices.” The CRS had mentioned, “Modi’s first term fell short of many observers’ expectations, as India did not move forward with anticipated market-opening reforms, and instead increased tariffs and trade restrictions.”
Despite the existing challenges with complicated tariff rules between the two countries, the Indian business and trading group shared their expectation of bringing a trade negotiation during Trumps’ visit. Reuters explained some US trade preferences for India was to improve access for selected US agriculture products and medical devices to India’s 1.3 billion consumers.
Referring to the new development, an Indian Foreign Ministry spokesman said in New Delhi that India would not “rush into” a trade deal with the US, saying a balanced outcome was needed. The spokesman added, “We know that American companies see India as a priority market for exports, but also see India as a priority destination for investment and locating sourcing and manufacturing. We would like to see steps that can facilitate that.”
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