Finance Minister Nirmala Sitharaman on Monday said negotiations for the India-US trade agreement remain ongoing, but both sides appear to have reached a “plateau”, leaving limited scope for further concessions.
Speaking at the Munich Security Conference, Sitharaman said there could still be room for movement if both countries identified areas where compromises were possible.
“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.
Sitharaman said a predominant feature of India-US trade relations is the trade imbalance in India's favour, with the US seeking to reduce its deficit.
“Ultimately, 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 the US would seek to compensate for what it believes it has lost over the years.
Drawing a comparison with India’s trade relationship with China, Sitharaman said trade imbalances have traditionally been addressed through negotiations, with countries seeking greater market access for their goods and services.
However, she noted that tariffs are increasingly being used as a tool to tackle 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 its trade relationship with China, given the sharp rise in the bilateral trade deficit.
“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 come after US Trade Representative Jamieson Greer said last week that the US and India were working towards finalising a bilateral trade agreement, but that a deal was not imminent.
Greer indicated that US President Donald Trump and Prime Minister Narendra Modi could hold another phone call “very soon” to assess progress in the negotiations.
Speaking at a press conference following the G20 Trade Ministers’ Meeting in Milwaukee, Greer said the two sides had identified the remaining areas of disagreement 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 had met Commerce and Industry Minister Piyush Goyal on the sidelines of the G20 Trade Ministers’ Meeting on September 30, where the two held a “productive discussion” on the early conclusion of a mutually beneficial interim trade agreement.
On the India-EU trade deal, Sitharaman described the agreement as a significant example of India’s approach to negotiating and concluding trade pacts.
She said calling it the “Mother of all deals” was appropriate, given that it would cover an economic bloc representing around two billion people and encompass a substantial 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,” Sitharaman said, adding that countries had increasingly moved away from adhering to established rules.
(With inputs from PTI)