India-US trade deal off the table, working on market access issues

India is at a ‘positive momentum’ with respect to inking trade deals with the UK, Australia, Canada, Bangladesh, European Union (EU), UAE and Gulf Cooperation Council (GCC) nations, as well as Israel, commerce and industry minister Piyush Goyal said on Thursday.

While India is working towards ‘early harvest’ agreements with the UK and Australia, as part of a larger trade pact, the US has indicated that they are not looking at a new trade agreement with India, Goyal said.

India will look at working with the US on market access issues to promote bilateral trade. In the past, India had extensive discussions with the US on a limited trade deal. However, the deal didn't get through.

“UK is progressing well. Teams are talking to each other, scoping is being done, line ministries are identifying areas in which we can quickly close the deal, in terms of early harvest, if possible. Instead of trying to address 11,000 (tariff) lines, if we can look at their and our areas of interest and close an early harvest agreement and (then) negotiate on the rest of the agreement,” Goyal said while addressing export promotion councils.

Similarly, Australia has shown the ‘highest level of engagement’ and significant interest to do an early harvest agreement. Early harvest deal is a precursor to an FTA, in which the trading partners reduce tariff barriers on limited goods to promote trade.

Finalizing a trade deal between India and EU may not be a smooth ride, considering there are 27 nations in the trade bloc and talks have restarted after a gap of eight years. “We will work very hard to speed it up,” Goyal said.

Considering the past experiences, India has revamped its strategy towards inking trade deals and will not allow the ‘same mistakes’ of the past.

“We are engaging with industry to ensure that FTAs are fairly and equitably crafted. At the same time, FTAs cannot be one-way traffic, we also need to open our markets, if we want a larger share in foreign markets. So, we need to identify areas where we can withstand competition. We can sort out FTAs fairly quickly, if the areas where we have the ability to compete internationally can be identified, as part of a collective effort,” Goyal said.

“Our effort is to ensure focus on countries where we have significant potential, where we can compete better and where market size is significant,” the minister said.

Had it not been for the outbreak of the pandemic and elections in Canada, the trade agreement with the country would have been at a more advanced stage, the minister said.

The minister’s statement assumes significance, with India walking away from the China-backed Asian trade bloc Regional Comprehensive Economic Partnership (RCEP) that signed an agreement last year to create the world's biggest free trade bloc. Last week commerce secretary had also said that signing FTAs are crucial as India is not a part of any local or regional regional arrangement.

“If the FTA with UAE happens, FTAs with GCC countries too will get expedited,” the minister said, while also urging export promotion councils to study FTAs and see if there are ‘hidden’ opportunities in them as it will help India set significantly higher export targets for 2022-23.

On Remission of Duties and Taxes on Exported Products

As far as the new export boosting scheme Remission of Duties and Taxes on Exported Products (RoDTEP) scheme is concerned, Goyal said that sectors such as steel, pharma, and chemicals sectors were not brought under the ambit of the scheme due to a lack of adequate budget.

“But we have an open mind to consider concerns and rectify mistakes that might have crept in if anyone feels it is detrimental to their industry,” he said.

He also informed the exporters that the ministry is setting up two separate divisions which will focus entirely on the services sector.

EEPC India Chairman Mahesh Desai said that the government should relook refund rates under RoDTEP and ensure full rebate on the taxes in the export production chain failing which Indian engineering goods exporters could lose some of the markets.

“In addition to this, dues on account of the MEIS scheme should be cleared. The working capital limits should be increased by banks as steel prices have increased by double and freight rates by 3 to 4 times. These support are needed to meet the $107 billion exports target for the sector in FY22,” he said, adding that representation has been given to the government in this regard.

Source: Business Standard