2+2 dialogue: India, US policymakers spar over trade ties

Defence minister Nirmala Sitharaman receives US defense secretary Jim Mattis before their meeting in New Delhi on Tuesday. Photo: Reuters

Senior trade policymakers from India and the United States sparred Wednesday, defending their respective positions on cross-border business.

Pitching for less protectionism, India's commerce secretary Anup Wadhawan stressed on the need to go beyond trade deficits and frame tariffs as per the prevailing economic strengths.

US' Under Secretary of Commerce for International Trade Gilbert Kaplan claimed fundamentally, its trade policies have not changed and stressed on the need on reciprocity, saying the lack of it has resulted in decisions which may be considered as adverse.

The comments come on the eve of the all important '2+2 dialogue' between Secretary of State Mike Pompeo and Defence Secretary Jim Mattis from the US and India's defence minister Nirmala Sitharaman and external affairs minister Sushma Swaraj in the national capital.

Kaplan said trade deficits are an important indicator of problems, but made it clear that the tariff actions on steel and aluminium were driven by lack of reciprocity from countries exporting those to the US and not the trade gap.

Wadhawan said over the last few years, trade deficit between India and the US has come down as India has started importing more goods from the US, including oil. He also said that while setting policies the indirect benefits to a country like import of iPhones by India from China which benefit an American company also need to be taken into account.

"Countries have to understand and accept globalisation. Protectionism is not going to make a country competitive," said Wadhawan.

He said US' unemployment rate - one of the biggest justifications for tariff imposition - has been coming down since the President Barack Obama's time.

The Indian bureaucrat said 6 per cent of the country's imports are from the US, for Washington, the same is 2.1 per cent on a bigger import bill.

Kaplan urged India to join an global supply chain and also not to impose any tariffs on particular goods and services.

He said the lack of free trade and reciprocity has led the US under President Donald Trump to move away from multilateral pacts and go for bilateral agreements instead.

Wadhawan underlined the importance of multilateral trade pacts, saying all the countries in the world have to move as per an accepted framework and added that "no country can afford to have a world carved around it".

He cited the case of the Regional Comprehensive Economic Partnership (RCEP) with countries in the Asean block, where India is moving ahead despite having a deficit with the countries and added that the onus is on individual country to identify and work on areas where it is less competitive.

Wadhawan said while framing international pacts, aspirations of developing countries have to be kept in mind, making a strong pitch for not equating developing and developed countries.

"Our trade policy is a continuum, we do not see any reason to revisit the trade policies," he said.

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