Negotiators from India are prolonging their stay in Washington D.C. as the deadline for reaching a trade deal with the United States looms closer, originally set for July 9.
This deadline holds significant weight as it marks the end of U.S. President Donald Trump’s reprieve from imposing ‘reciprocal tariffs’ on various countries, including India.
Countries globally are rushing to finalize agreements, or at least mini-deals, to avert the imposition of high tariffs, which could reach 26 percent for India.
Despite indications from President Trump that a ‘very big’ deal with India is on the horizon, discussions have stalled over contentious issues pertaining to agriculture and dairy sectors.
The U.S. administration has been pushing for India to reduce trade barriers on American genetically modified (GM) crops and dairy products, areas in which India is hesitant to compromise.
India’s cultural preferences and agricultural policies strongly oppose the introduction of GM food crops, and there are significant concerns regarding the use of animal feed containing non-vegetarian components in American dairy products.
As the talks progress, President Trump has made it clear that he will not extend the trade reprieve past July 9, raising the stakes for both nations as they approach the impending deadline.
The Trump administration’s demands also include the opening up of sensitive sectors, particularly agriculture and dairy, which have proven to be politically charged in India.
The ramifications of a deal perceived as unfavorable could provoke considerable backlash from Indian farmers and consumers, whose livelihoods are deeply intertwined with these sectors.
Additionally, India is seeking assurances that all U.S. tariffs will be eliminated once an agreement is reached, including the baseline tariff of 10 percent on goods, as well as the 50 percent duty on steel and 25 percent on automobile parts.
While the U.S. has expressed a willingness to entertain tariff rate quotas (TRQs) for certain products, the challenge remains in negotiating access for agricultural and dairy sectors.
A source involved in the negotiations highlighted that dairy imports are limited in India due to two main reasons: the subsistence-level of dairy farming practiced by Indian farmers and the cultural and religious sentiments that conflict with American cattle feed practices.
Moreover, the U.S. has shown reluctance to implement a mechanism certifying that exports to India are non-genetically modified, contributing further to the impasse.
Analysts suggest that, despite these hurdles, a ‘mini deal’ could be on the table, potentially mirroring the recent trade agreement between the U.S. and the U.K.
Such a preliminary agreement could center primarily on tariff reductions while deferring discussions on more complex issues, including services trade, intellectual property rights, and digital regulations for future sessions.
The unpredictable nature of President Trump’s trade policy has fostered uncertainty not only in U.S.-India relations but also among the broader network of allied nations.
Countries such as India and Japan have hardened their negotiating postures, and even European Union member states are advocating for tougher strategies during trade discussions.
President Trump has utilized an assertive approach that has yielded results, such as halting negotiations with Canada, compelling them to revoke a digital services tax, subsequently leading to resumed talks.
While President Trump engages allies with a vigorous stance, he has paradoxically extended amiable relations with adversaries like China and Russia.
Currently, he is pursuing a trade understanding with China, marking a shift in dynamics as he works toward establishing a comprehensive deal, and has exempted Russia from reciprocal tariffs.
As the deadline approaches, the prospects of a successful trade negotiation between India and the U.S. remain uncertain, with key sectors standing at a crossroads.
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