India, US hope to resolve trade disputes as Suresh Prabhu holds talks

India will push for amicable solutions to trade disputes with the United States while hoping to address American concerns over market access and tariff levels during bilateral meetings between the two nations due soon.

The decision was taken after Commerce and Industry Minister Suresh Prabhu visited Washington over the past two days. Prabhu held deliberations with United States Secretary of Commerce Wilbur Ross, United States Trade Representative Robert Lighthizer and Secretary of Agriculture Sonny Perdue.

Over the very same days, US President Donald Trump took potshots at India and China during the G7 Summit, saying these countries had taken the US for a ride by ramping up import duties on American products such as Harley Davidson motorcycles.

“It was decided to carry on discussions at the official level to arrive at solutions for each other’s trade concerns,” Prabhu tweeted on Wednesday.

A comprehensive team of officials, which might include those from other ministries such as agriculture, would visit the US over the next few days, a commerce ministry official said.

India's relations with its second-largest trade partner have been choppy during the Trump years. While exports to the US have grown — $47.87 billion worth of Indian shipments reached US ports in 2017-18, up from the $ 42.21 billion a year before —America’s irritation with a wider trade deficit has also grown.

Officials suggested the US was demanding a clear indication from India on reducing the trade deficit. The US is also in the process of terminating the Generalised System Preferences (GSP), which has allowed duty-free access for 3,500 Indian products to US markets. Officials added India might not put up a fight in this regard.

New Delhi is also hoping that the talks will help break the deadlock over the US case against India on misuse of export promotion schemes in contravention of World Trade Organization rules. The US has alleged an estimated $7 billion worth of benefits were transferred to exporters through six major promotion schemes, like the Merchandise Exports from India Scheme and the Export Promotion Capital Goods Scheme.

The scheme provide support to thousands of entities through ‘scrips’ that can be used to pay basic customs duties.

While New Delhi has argued the law invoked by the US — the Agreement on Subsidies and Countervailing Measures (ASCM) — allows India a window of eight years to phase out these subsidies, it has remained jittery because the schemes effectively support exports in crucial labour-intensive sectors.

The talks would also focus on Trump's threat of a “reciprocal tax” against major trading partners, the official mentioned above said. 

Trump’s argument that US exports are facing higher tariffs while it allows imports at lower duties has led to executive decisions bringing in a levy of 25 per cent tariff on steel and 10 per cent on aluminium imported from all countries. India’s steel and aluminum exports to the US are 2 per cent of outbound shipments of both products, but it has launched a case against the US at the WTO on this.