In the first visit of a senior US trade official to this country, assistant US trade representative Mark Linscott will land in New Delhi to huddle with senior commerce ministry officials on April 9.
In the first visit of a senior US trade official to this country since the Trump administration slapped curbs on steel and aluminium supplies from India and some others, assistant US trade representative Mark Linscott will land in New Delhi to huddle with senior commerce ministry officials on April 9, sources told FE. Separately, both the countries will hold the first formal consultation meeting at the World Trade Organisation (WTO) on April 11 over the US complaint to the multilateral body last month that New Delhi had been offering illegal export subsidies, said the sources. The US claimed that India’s export subsidies, worth around $7 billion a year, “harm American workers by creating an uneven playing field on which they must compete”. The meeting with Linscott on Monday, aimed at setting the stage for the crucial trade policy forum (TPF) meeting to be held later this year, comes at a time when a trade war involving the top two economies, the US and China, threatens to spiral out of control, with the US seeking to step up the offensive against countries with which it runs a trade deficit.
While China alone accounted for a massive $375 billion, or 46%, of the US goods trade deficit of $810 billion in 2017, India made up for just 2.8% and occupied the ninth spot in the list of nations with which the Trump administration seeks to pursue a trade balance agenda. The sources said the US could use a special tariff regime it offers to many poor and developing countries, including India, for supplies of certain products duty free under the generalised system of preference (GSP) as a bargaining tool to ask India to restore trade balance. They said Washington could also push for higher supplies of US farm products and a more stringent intellectual property regime in India that would suit the American interest. It could also impress upon India to refrain from price control measures on medical equipment like bioresorbable stents that, it says, is hurting US companies. Under the GSP programme, select developing countries are allowed to export specified products duty-free to the US. Trade sources said India was its top beneficiary in 2016, as it shipped out goods worth $4.7 billion to the US under GSP, which were equal to over 11% of its exports to the world’s largest economy.
Exports of select items in the textiles, engineering, gems and jewellery, and chemical sectors are allowed duty-free access to the US. For its part, the Indian side will seek a greater market access in agriculture and impressed upon the US not to link benefits under the GSP with trade balance, as these are two separate issues and countries with much higher per capita income than India’s are also gaining from the GSP. The US has already announced plans to impose tariff on goods supplies worth $50 billion from China, invoking almost identical retaliatory measures from the second-largest economy. As for the dispute over export subsidies, India is seeking a reasonable time frame of eight years from the WTO to phase out its export subsidies, as the country has breached an income threshold stipulated by the multilateral body to end such sops. However, under a more immediate threat of being deprived of the subsidies is India’s labour-intensive textile and clothing industry, as it crossed the sector-wise threshold (3.25% of global trade) as early as 2010. An eight-year window to end the subsidies (linked to export obligation) in the sector will expire in December 2018. Some of the important export promotion schemes that could be challenged by the US include MEIS and EPCG.