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The Future of India-USA Bilateral Trade

“we can have a trade deal with India but I am really saving the big trade deal for later on. We are doing a very big trade deal with India. I don’t know whether we will have it before the election, but we will have a very big deal with India.” said Donald Trump

India –USA trade relations has seen its fair share of ups and downs since India’s independence (1947). But it has been under a lot of strain ever since US ended India’s preferential status under generalized system of preference (GSP) from 5th June 2019. GSP is a US trade preference program which promotes economic development by allowing duty free entry for thousands of products from designated beneficiary countries.

The US trade representative (UTSR) in a statement said, “India has implemented a wide array of trade barriers that create serious negative effects on United States commerce. Despite intensive engagement, India has failed to take the necessary steps to meet GSP criterion.”

“I have determined that India has not assured the US that it will provide equitable and reasonable access to its markets. Accordingly it is appropriate to terminate India’ termination as a beneficiary developing country effective June 5, 2019”, the statement read.

With the Indian economy going on a downward slope, the relationship between the two countries is very crucial now more than ever. Every time the leaders of the two countries come together, all eyes are on them with the hopes of a major trade deal between the countries.

The announcement of Donald Trump’s visit to India brought on lots of hopes for a bilateral trade between the two Nations, but all hopes were crushed before even the trip could take off. 5 days before his 2 day trip to India, President Donald trump said that there will be a major trade deal with India but was not clear if it will take place before or after presidential elections. He said that he is saving the major trade for later, indicating that no major trade deals will be signed on his upcoming trip. He said, “we can have a trade deal with India but I am really saving the big trade deal for later on. We are doing a very big trade deal with India. I don’t know whether we will have it before the election, but we will have a very big deal with India.” He also added saying,” we are not treated very well by India, but I happen to like Prime Minister Modi a lot and he told me we’ll have seven million people between airport and the stadium so it is going to be very exciting.”

However Raveesh Kumar, spokesperson of Ministry of External Affairs (MEA) says with this trip, India –US relations will only go forward. He said,” all issues will come up for discussion- defense and security, trade and investment, counter-terrorism, energy security, people to people exchanges and certain  amount of time will also be devoted to exchange of views on regional and multilateral issues. Both sides are working to showcase a progress in the relationship in a befitting and a meaningful manner during the visit. We are of course eagerly looking forward to the visit and which will provide an opportunity for the both leaders to review the bilateral ties and further strengthen our global strategic partnership.” While a statement from white house upon the visit said,” the trip will further strengthen the United States-India strategic partnership and highlight the strong and enduring bonds between the Americans and Indian people.”

It is however important to note that, during the 2019 G20 summit, Donald trump had said that there would be very big trade deals to announce with India and Japan, when just a day before he had tweeted calling for the withdrawal of high tariffs imposed by India. “I look forward to speaking with Prime Minister Narendra Modi about the fact that India, for years having put very high tariff against the United States, just recently increased the tariffs even further. This is unacceptable and the tariffs must be withdrawn!”, his tweet read.

He however didn’t raise the issue talking to the reporters when he and Narendra Modi met at the sideline of the G20 summit in Osaka. Trump said, “I think we’ll continue to get along with India. I think we are going to have some very big things to announce, very big trade deals.”

With the increased trade and tariff friction between the two Nations, a lot was riding on this trip with hopes of some kind of relief in the trade but it appears there won’t be an immediate solution to this trade war.

The views and opinions expressed by the writer are personal and do not necessarily reflect the official position of VOM.

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