New Delhi/Munich: Finance Minister Nirmala Sitharaman on Monday said negotiations on the India-US trade agreement were still underway, but both sides appeared to have reached a “plateau”, leaving limited scope for further concessions.
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“The agreement’s negotiations are still ongoing, although we like to believe that both sides have reached a plateau beyond which giving or taking might be very, very difficult. But maybe, if there is room to operate from, both sides would do it,” she said at the Munich Security Conference.
Sitharaman said a key feature of India-US trade relations was the trade imbalance in India’s favour, with the US seeking to reduce its deficit.
“Naturally, the deficit is there on their side, or the balance is unfavourable for the US, so they would want to reduce that imbalance,” she said, adding that Washington would seek to make up, from its perspective, for what it believes it has lost over the years.
Drawing a comparison with India’s trade relationship with China, Sitharaman said trade imbalances had traditionally been addressed through negotiations, with countries seeking greater market access for their goods and services.
However, she said tariffs were increasingly being used as a tool to address trade imbalances.
“Now the imbalance is being sought to be addressed through other means, where, as you rightly said, tariffs have become weaponised. Tariff was an instrument of negotiation, and tariff had a certain framework within which you would apply it. Today, the framework is there, but tariffs are going,” she said.
Sitharaman also questioned whether India could adopt a similar approach in dealing with China, given the significant trade imbalance between the two countries.
“The trade imbalance with China for India, for instance, since 2014, has been growing exponentially. So, when you’re talking of trade and trade imbalance being the sole criteria to reduce the imbalance, to what extent beyond negotiation can you go?” she asked.
Her comments came after US Trade Representative Jamieson Greer said last week that the United States and India were working to finalise a bilateral trade deal, although an agreement was not imminent. He also indicated that US President Donald Trump and Prime Minister Narendra Modi could hold another phone call “very soon” to assess progress.
Addressing a press conference after the G20 Trade Ministers’ Meeting in Milwaukee, Greer said the two sides had identified the issues that remained unresolved and were working towards an agreement.
“We had a very constructive conversation, Minister Goyal and myself. Our staff is meeting right now since they’re in the country, and we’re here,” Greer said.
Greer met Commerce and Industry Minister Piyush Goyal on the sidelines of the G20 Trade Ministers’ meeting on September 30 and held a “productive discussion” on the early conclusion of a mutually beneficial interim trade agreement.
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On the India-EU trade deal, Sitharaman said it was a standing example of how India was negotiating and finalising trade agreements.
Calling it the “Mother of all deals”, she said the description was appropriate as the agreement would cover people totalling around two billion and a significant share of global trade and GDP.
“Ultimately you’re tailoring the agreement to keep national interest alive but to survive in a very challenging global environment where no WTO-related laws have been left to be respected,” she said, adding that countries had increasingly moved away from adhering to established trade rules.
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