Trade and tariffs to top Indo-US 2+2 Agenda

Smita Sharma

Tribune News Service
New Delhi, August 19 

As New Delhi prepares to host the twice postponed inaugural Indo-US 2+2 dialogue on 6th of September, sources suggest trade will be key issue. This will be a first meeting between Indian top leaders and  US Secretary of State and former CIA Chief Michael Pompeo who replaced Rex Tillerson leading to postponement of talks earlier in April.

 Pompeo and US Defence Secretary James Matis will hold consultations with their counterparts Sushma Swaraj and Nirmala Sitharaman and also meet with Prime Minister Modi. However, economics as strategic component will be top of mind along with some defence enabling agreements in view of India’s elevated status as major defence partner and STA (Strategic Trade Authorisation)-Tier 1 country, comparable to NATO allies. 

 Sources privy to discussions told The Tribune that there is frustration in the Trump administration with India’s slow opening up of its markets which needs bolder strokes. A displeasure made known by the US Ambassador Kenneth Juster recently at en event discussing 70 years of bilateral ties. “We have done a tremendous amount of cooperation in the defence and security area, counter terrorism, technology, and while we have steadily grown the trade and investment relationship, we are far far away from fulfilling this potential, and I think both sides need to look at this as an important strategic element of our relationship,” said Juster.

 Making a case for lowering trade barriers, Juster cited examples of much smaller sized countries like Israel and Estonia even as US continues to impose higher trade tariffs on imports including 

25% increase on steel and 10% increase on aluminium products affecting several countries including India. “There is simply no reason why there shouldn’t be more innovation and entrepreneurship taking place in India, rather than having 300,000 Indian entrepreneurs doing their work in the United States,” said the envoy.

 Sources point out that India is breathing easy with a carve out on American law CAATSA which would allow it to buy S-400 missiles from Russia amid US sanctions. But reminded the waiver would still need Trump’s signature and ‘his mercurial temperament’ needs to be factored in. Trump would like to see India deliver on trade and reduced oil imports from Iran- a regime that is back to facing heavy sanctions since Trump withdrew from the historic nuclear deal. While reports suggest that Indian still remains the second biggest crude importer from Iran after China, an American official said, “We have been assured by New Delhi it is only a blip and the actual trend of imports is moving downwards.” Indian concerns on developing and operating the strategic Chabahar port and its significance for Afghanistan would figure in talks with clarity needed as insurance, shipping companies,  banking channels and payment mechanisms are hit by sanctions. 

 Another area of growing friction is a Reserve Bank order instructing technology companies to base servers in India to which Juster underlined, “I worry now with this talk of data localisation. There is a legitimate concern over data privacy, but do not construct these laws in a way that will make it more difficult for India to be a hub for technology companies all over the world.”