Updated: 21 Sep 2019, 06:32 PM IST
A deal between the world’s most populous democracies would be a welcome victory for Trump, whose administration has made little headway negotiating an end to its prolonged trade war with China. Trump is also expected to sign a deal with Japanese Prime Minister Shinzo Abe next week that lowers Japanese farm tariffs.
The deal under discussion with India would lower some tariffs on U.S. produce and restore preferential treatment for some Indian exports to the United States, the sources said.
Stage is set
“There’s a push to get something done with India, with an eye for UNGA,” said a Washington-based source familiar with the discussions.
Trump has demanded better terms of trade from most of the top commercial partners of the United States, and blames previous deals for the loss of millions of US manufacturing jobs.
US-India trade relations have been fraught
The United States has also taken issue with India’s new investment rules on e-commerce that limit how companies like Amazon.com Inc and Walmart-backed Flipkart can do business in a rapidly growing online market set to touch $200 billion by 2027.
“We’ve been talking to the Americans, we have engaged them for many months now,” Indian Foreign Minister Subrahmanyam Jaishankar said at a news conference this week. “My expectation is that some of the sharper edges, they would be addressed in some forms in the not too distant future.”
India responded with higher retaliatory tariffs on 28 US products, including almonds, apples and walnuts.
India is the largest buyer of US almonds, paying $543 million for more than half of US almond exports in 2018, according to the US Department of Agriculture. It is the second largest buyer of US apples.
Pork, dairy, nuts
India is likely to allow some US dairy imports, the official said. Another Indian official said the United States was pushing India to remove high pricing barriers on imported US medical devices including cardiac stents.
In return, India wants the GSP restored for a few more years, as Modi struggles to boost exports dampened by sluggish global demand made worse by the US-China trade war. New Delhi also wants market access for some of its farm products such as grapes to export to the United States.
Pleasure doing business
Both sides are discussing revising India’s domestic content rules on ethanol to allow more imports of the US fuel additive, two US sources familiar with the discussions said.
A narrow deal would be a positive first step and leave thorny issues aside such as the new e-commerce rules, said Roger Murry, deputy director of the Alliance for Fair Trade with India, a group of US trade associations.
“We’re hopeful that the Houston events can be bolstered by some real progress on the trade front that shows the US and India can negotiate some reasonable solutions,” Murry said.