The US is learnt to have sought better trade balance with India through greater access to American products and a removal of restrictions on the pricing of medical equipment like bioresorbable stents, in the first crucial meeting on Tuesday of senior trade officials of both the countries since the Trump administration announced higher tariffs on steel and aluminium from countries including India.
To keep up pressure, the US side, led by its assistant trade representative Mark Linscott, didn’t commit much on lifting the tariff on supplies of steel and aluminium, apart from suggesting that India’s concerns will be conveyed to the relevant authorities in Washington, sources told FE. The US has announced plans to impose a duty of 25% on steel and 10% on aluminium imports.
The US side also sought to link a special tariff regime it offers to many poor and developing countries, including India, to commitment on greater trade balance and removal of price curbs on medical equipment.
Under the generalised system of preference (GSP) programme, select developing countries are allowed to export specified products duty-free to the US. According to trade sources, 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.
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 Indian side believes linking benefits under the GSP with trade balance isn’t wise, as these are two separate issues and even countries with much higher per capita income than India’s are also gaining from the GSP.
The US is learnt to have said that until it decides on whether to renew the tenure of GSP regime with India, which expired recently, India will continue to enjoy the stipulated benefits.
The meeting with Linscott is aimed at setting the stage for the crucial trade policy forum meeting to be held later this year.