India pursue free trade pact with the US

India wants to extricate trade talks with the United States (US) from the current morass of endless recriminations and negotiations. It has been testing the waters recently for a free trade agreement (FTA) as part of an expanded trade relationship. Although a formal offer has not been made yet, senior Indian officials have pitched the idea in closed-door settings.

Washington DC is unlikely to jump at it because, it is being said, there is little appetite for a trade deal in either the Joe Biden administration or US Congress at this moment. That’s probably why the administration has ruled out, for now, a Phase Two deal to follow up the Phase One of the US-China agreement signed by President Donald Trump.

India and the US can discuss the idea, and decide to drop it altogether or put it on pause for now at the upcoming meeting of the India-US Trade Policy Forum on November 23 in New Delhi. US trade representative Katherine Tai is leading the US side at this meeting of the top platform for trade negotiations for the two countries; Union commerce minister Piyush Goyal will lead the Indian side.

India currently has FTAs with five countries bilaterally and 18 countries multilaterally — 11 member-countries of the Association of South East Asian Nations (ASEAN) and seven of the South Asia Free Trade Agreement. Four more are under discussion; these include bilateral deals with Australia, the United Kingdom and the United Arab Emirates and a multilateral arrangement with the European Union, which has 27 members. The US has 14 trade agreements with 20 countries, including a bilateral trade agreement with China.

An FTA obligates signatory countries — bilaterally or multilaterally — to a set of mutually agreed conditions pertaining to trade in goods and services among them. Terms can include tariff levels, and removal of measures and provisions that act as trade barriers. India and the US have plenty of such issues that can, theoretically, be resolved by an FTA. Or, as one expert argued, disagreements can outlive FTAs.

Even if Indian and the US were to agree today, an FTA will still take years to be signed and then some more years — perhaps even 10 to 15 — to be operationalised.

Or longer. Or never. India and the US have some history here. The two countries began discussing a Bilateral Investment Treaty (BIT), which seeks to protect and promote private investment among signatory countries, during the last years of President George W Bush’s tenure. And they are still nowhere near a text. The US put talks on hold as it overhauled its model BIT and then India decided to do so as well. Both countries have their respective model BITs now, the US since 2012 and India since 2015. But they are not discussing it anymore; an abandoned enterprise.

An India-US FTA may or may not face the same fate. But there is only one way to find out — by going for it. 

Source: KhmerTimes