US-India analysts tracking President Donald Trumps scheduled visit to India later this month are keenly watching for a much anticipated trade deal that holds the promise of ending three years of escalating trade tensions, but are dialling down expectations of this being a “transformational” moment.
Trump and First Lady Melania Trump are scheduled to visit India February 24-25 for the first time since he occupied the White House.
Speaking to reporters this week, Trump said the trade deal with India will happen if “we can make the right deal”.
“I’ll be watching most closely the much-anticipated trade deal, which is likely to represent some good progress in solving a handful of price caps and tariff issues, but as far as I can tell, (it) will not mark a transformational moment,” Alyssa Ayres, senior fellow for India, Pakistan, and South Asia at the Council on Foreign Relations, told media.
Ayres served as deputy assistant secretary of state for South Asia from 2010 to 2013 and is the author of ‘Our Time Has Come: How India is Making Its Place in the World’.
Bharath Gopalaswamy, Senior Fellow, Observer Research Foundation, said the “painfully negotiated” trade deal in the making will be a “win-win” for both sides.
“Other issues that are likely to come up are the evolving US-Iran relations as well as the implementation of US’s free and open Indo-Pacific strategy,” he said.
Ayres said the “challenges” in the US-India economic relationship go back many years and are “tough to resolve” although successive US and Indian governments have been chipping away at the task.
Explaining the gaps, Ayres said India and US discussed a Bilateral Investment Treaty for 10 long years “before both sides figured out that our model BITs on each side are just too far apart”.
Despite these irritants, there remains “strong compulsion” and “convergences” for the two countries to collaborate, according to Daniel Twining, President of International Republican Institute, a think tank.
Speaking to IANS, Twining said “the US will want India to lift protectionist restrictions on its growing domestic market, and India will want more US trade and investment as well as more predictability for highly skilled immigrants”.
Twining said: “Both Modi and Trump also understand that more than any other factor, China’s ambitions and growing influence risk undermining peace and security, and this creates convergences for the US and India to cooperate – as do climate change and new frontiers in clean energy, technological transformation, and the prosperity agenda.”
For several weeks now, negotiators on both sides have been working on overdrive to seal the impending trade deal, just like they did before Narendra Modi’s visit to the US last September.
The Trump administration comes into the negotiations riding high on recent deals with China and the US-Mexico-Canada Agreement (USMCA).
The US has been seeking greater market access for its technology exports, agriculture and dairy products. It has pushed back against Indian policies on medical devices and India’s proposals related to data localisation and e-commerce.
India and the US should “focus on what is doable”, according to Mark Linscott, Senior Fellow with the South Asia Program at the Atlantic Council, writing in The Hindu newspaper.
He writes: “A new, hybrid approach on investment would be a substantial step in the right direction. It will be critical to sustain momentum coming out of a first trade deal when the two leaders meet in Delhi. If India and the U.S. fail this test, the trade relationship is more likely to languish than blossom.”
After Trump took office, the US has revoked duty-free treatment for some Indian exports under the Generalized System of Preferences and threatened sanctions on any Indian company importing oil from Iran. The GSP is designed to give duty-free market access to exports from developing countries.
The Trump government has reportedly been mulling a “Section 301 investigation”, under the US Trade Act of 1974 which allows the executive branch to impose tariffs on countries it accuses of unfair trade practices.
Beyond the policy issues, the grand reception that awaits Trump in India is getting a lot of play.
“The President seems very focused on the rally in Ahmedabad, so I’m watching that too,” Ayres said.
Speaking to reporters at the White House, Trump said he expects to see “millions” of people on the way from the Ahmedabad airport to the Sardar Vallabhai Patel stadium in Motera, Ahmedabad, where he is expected to address a massive public rally with India’s Prime Minister Narendra Modi.