Indo-US bid to avoid trade dispute spillover

NEW DELHI

India and the US will attempt to insulate their trade dispute from areas of cooperation when US Secretary of State Mike Pompeo begins the first high-level visit from Washington to New Delhi after the Lok Sabha elections.

On his arrival tomorrow, Pompeo will be seeking greater Indian commitment for the Asia-Pacific in tandem with the US, Australia and Japan to checkmate China. He also wants India to opt for American oil, gas and defence equipment. Progress on these fronts will set the stage for a more fruitful meeting between PM Narendra Modi and US President Donald Trump towards the end of this month.

But the widening disputes on trade could rock the relationship in other areas. On the eve of Pompeo’s visit, India imposed retaliatory tariffs on 28 US product lines such as apples from Washington and almonds from California in response to similar action by the US. India had exercised a year of self-restraint before hiking tariffs on US goods late last week. Since the US action of 2018, the trade dispute has touched Rs 40,000 crore worth of Indian exports to the US. Talks have also failed on disputes in a number of areas such as medical devices, localisation of data, export of dairy products and restrictions on e-commerce.

Pompeo provided a glimpse of the hard bargaining that lies ahead of India when he hoped his interlocutors here would agree to lower tariffs and dismantle non-tariff barriers in several sectors.

India has already tried to assist US security and strategic goals in West Asia by ending its energy ties with Iran and was among the first to emulate the US by directing its airlines not to overfly Iran. But it is resisting pressure to end its imports of military equipment from Russia.

India’s effort has been to avoid a spillover of the trade dispute to areas such as immigration quotas, US assistance for UNSC permanent membership, transfer of high-end military technology and a helping hand in tackling problems with Pakistan and China.

Widening gulf

Last year, the US imposed higher tariffs on Indian aluminium and steel
Before new govt could settle in, US withdrew zero duty on Rs 40,000-crore Indian exports
Last week, India announced 120% tariff on 28 products after delaying it for over a year

Other differences

US concerns

Price limit on US medical devices; installation of servers by MNCs in India; non-certified import of dairy products; restriction on e-commerce giants like Walmart and Amazon

Indian concerns

US restrictions on immigration; getting too deeply involved in US plan for Asia-Pacific; slow pace of transfer of high-end US technology, excluded from talks on Afghan settlement; forced to burn bridges with Iran