NEW DELHI: As a series of trade and economic disputes pile up between India and US threatening the larger relationship, Indian commerce minister Suresh Prabhu will travel to the US next week to talk to his counterparts, Wilbur Ross and USTR Robert Lighthizer. The visit, which was organized at short notice, will try to bring about some understanding or resolution on a number of issues.
Speaking to reporters Prabhu said he would be “explaining” India’s position but they were not formal trade talks. “There are no big expectations, but we will try to find solutions to the problems.” Prabhu’s visit comes just weeks before foreign and defence ministers Sushma Swaraj and Nirmala Sitharaman are due to be in Washington for the first round of 2+2 dialogue on July 6, which has now been postponed several times.
A couple of big issues dominate the landscape — of which Harley Davidson motorcycles are the most visible. US president Donald Trump scoffed at Modi’s offer to bring down tariffs on these bikes from 75 per cent to 50 per cent. Senior officials in the Indian government said Modi had been ill-advised on that front. US officials said, on condition of anonymity, that it is a relatively trivial issue, but it had caught the attention of Trump. They hinted that if India were to show flexibility on Harley-Davidsons, the US could move on other ticklish issues. Questioned, Prabhu said, “Every country has a right to demand the best deal for itself. So if the US has some demands on the Harley Davidson, as I have seen reported, let us see what they are. So far we have not heard formally on this issue, so we will go for talks and understand their concerns and deal with them appropriately.”
And there is a growing number of them. Prabhu will have his hands full, trying to resolve Indian price caps on medical devices like stents etc; pork imports, data localisation, where India is refusing to allow mirroring particularly to fintech companies, as well as on export subsidies, where US says India is not WTO-compliant, but India says it is. Prabhu said, when asked, “those measures are not subsidies and instead ways to partially offset various additional costs incurred by them (exporters). Our export support regime is not violating any of the WTO rules,” he said. “We are also working to make sure that there is a proper clarity on this. But what we are doing today is not violating any WTO rule,” he added.
Prabhu said he would raise the issues of professional H-1B visas and H4 visas with his counterparts. “We will be raising the visa issue because we feel that Indians and their spouses are facing some issues there,” he said. Despite the rhetoric, the US Congress has not yet changed any of the provisions of the H-1B visas, of which India is the largest beneficiary. But on H-4 visas (for spouses), there is little chance that India will get any satisfaction — taking things back to 2015, which was when H4 was introduced.
India may be joining the world in criticising US’ new protectionism, but US officials say the US is still more open. Instead, they say India’s recent moves to slap tariffs on auto components etc are prompting US automotive companies to consider moving out of India to other countries like Thailand and Vietnam. Tesla and General Motors have been “scared away”.
The economic friction is spilling over on other areas of the India-US bilateral relationship as well. But officials on both sides said given the strategic nature of the relationship, they would work harder to find common ground and resolve the problems. For instance, the US has threatened to remove GSP preferences against India, because India is refusing to reciprocate.
Washington may also slap sanctions on India for buying Russian missiles under their new law CAATSA. India has declared it would not stop buying the Russian S-400 Triumf systems, prompting hectic discussions between US and India. “We’ve discussed CAATSA with the Government of India just as we have discussed it with a number of others who might be potentially contemplating a purchase of large defence systems from the Russians. We want to work with all of our partners to help them identify and avoid engaging in any potentially sanctionable activity,” said Tina Kaidanow, principal deputy assistant secretary of state for political-military affairs, who recently visited India for these talks.