US-India tensions have escalated in each side’s tariff policies: Under the Trump administration

The United States and several other countries have requested to join various WTO dispute consultations against India

Under the Trump administration, US-India tensions have increased over each side’s tariff policies, a Congressional report has said, noting that the two sides have also held concerted negotiations to address these trade frictions.

The bipartisan Congressional Research Service (CRS), in its latest report, pointed out that India’s recent tariff hikes on cell phones and other telecommunication goods went up from zero per cent to 15-20 per cent in the last few years.

“Under the Trump administration, bilateral tensions increased over each side’s tariff policies. In general, India has relatively high average tariff rates, especially in agriculture. It can raise its applied rates to bound rates without violating its commitments under the WTO (World Trade Organization), causing uncertainty for US exporters,” said the CRS report, which is prepared for the members of Congress ahead of trade decisions.

The United States and several other countries have requested to join various WTO dispute consultations against India, related to its technology tariffs, also questioning its compliance with the WTO Information Technology Agreement (ITA).

“India opposes the 25 per cent steel and 10 per cent aluminum national security-based ‘Section 232’ tariffs that the Trump Administration imposed in 2018. India repeatedly delayed applying planned retaliatory tariffs against the United States in hopes of resolving the issues bilaterally,” it said.

After India lost its eligibility for the US Trade Preference Program, India imposed higher tariffs of 10 per cent to 25 per cent, affecting about USD 1.32 billion of US exports, such as nuts, apples, chemicals, and steel, the report stated, adding that the two sides are challenging each other’s tariffs in the WTO.

“Under the Trump administration, the United States and India held concerted negotiations to address trade frictions. A potential trade deal could include partial restoration by the United States of India’s GSP (Generalised System of Preference) benefits in exchange for certain market access commitments according to press accounts,” CRS said.

Yet, the long expected limited trade deal has not materialised to date, the report said.

Negotiations under prior administrations on a Bilateral Investment Treaty (BIT) are stalled due to differences on approaches on investor protection.

On the government-to-government trade policy, the CRS listed a set of key issues. Main among them was what aspects of bilateral trade relations would change or remain the same under a President-elect Joe Biden-led administration.

President Donald Trump, a Republican, is set to be succeeded by Biden, a Democrat on January 20 after he won the November 3 presidential election.

Other key issues were, what trade issues should the United States and India prioritise in future talks, the potential for broader trade agreement negotiations, will India and the United States renegotiate entry into the Regional Comprehensive Economic Partnership (RCEP) and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), or potentially seek other ways to engage on regional issues, and are there opportunities for the United States and India to bridge differences on multilateral trade issues.