Trade deal with EU may have spurred US announcement – The Times of India
NEW DELHI: India’s negotiations with the UK and the European Union for FTAs, which had been going on for years got a sudden boost last Feb after Prime Minister Narendra Modi and US president Donald Trump announced the launch of talks for a bilateral trade agreement.The pattern has been repeated with a difference. This time, the trade agreement with the EU appears to have provided a strong goad for the US to wrap up the long-lingering negotiations with India.With WTO in a disarray and restoration of multilateral trade order not in sight, it’s bilateral deals that are the order of the day.
How much of India’s trade now flows through deals
There are strong reasons why India and the US should have strong trade ties. Each has comparative advantages and they have complementarities that explained the hope that the first trade deal under Trump 2.0 will be with India. But, things went haywire for reasons not related to trade: India’s refusal to engage Trump’s claims on Operation Sindoor and the pressure on him domestically to appear tough on Moscow resulting a 25% secondary tariff for India’s purchase of Russian crude.As prospects of an early deal receded, the agreement was never off the table. Even the tough talking Americans engaged. India, of course took it vigourosuly.
Why was deal finalised now
India had put in significant resources for the trade deal with the US, given its large exposure to the market. While Modi and Trump exchanged calls, commerce and industry minister Piyush Goyal and external affairs minister S Jaishankar engaged with their counterparts in Washington. Apart from officials from the commerce and external affairs ministries, the Indian embassy in Washington too kept the dialogue going despite the ups and down.
Indian exports
Those familiar with the bilateral talks have also pointed to Sergio Gor’s arrival helped “normalise” trade ties which appeared significantly ruptured a few months ago.The long drawn negotiations with the US also prodded India to push for agreements, which were never on the top of the list. Be it New Zealand, Israel or Mercosur, every bloc and country was suddenly in the picture. Besides, several agriculture products, automobiles and wine and spirits were also part of the give and take involved in trade dialogues.Indian trade negotiators have spent the last 12 months zipping in out of meetings with multiple trading partners, juggling geographies and commodities.While India and the UK finalised their trade deal in early May, the US President’s actions drove the bureaucracy in Brussels to be flexible in its talks, leading to the announcement of the deal on Jan 27 after negotiations dragged on for 18 years.The rush for trade agreements, covering goods services and new areas, such as intellectual patent regime, small business and labour and sustainability, has meant that over two-thirds of India’s exports are now covered by the major FTAs, with almost half of imports also within their ambit.