New Delhi: The interim trade agreement between India and the US will be signed once the new global tariff architecture of America is in place, a senior government official said on Monday.
“Because at the end of it, each country is doing a deal as a part of a package where one is at comparative advantage…vis a vis competitors,” the official said.
India and the US last month announced finalisation of a framework for the first phase of the bilateral trade agreement. According to that framework, the US had agreed to reduce tariffs on India to 18 per cent.
On 20 February, the US Supreme Court revoked President Donald Trump’s authority to use the IEEPA for imposing country-specific “reciprocal” tariffs. Thereafter, from February 24, the US administration imposed a blanket 10 per cent surcharge on all countries for 150 days.
India and the US announced a trade deal on 2 February. A joint statement for the same was released on 7 February and the 25 per cent additional ad valorem tariffs imposed by the US on certain Indian exports, citing India’s imports of Russian oil were removed. According to the interim deal, the US had agreed to reduce tariffs on India to 18 per cent.
Currently, both teams are negotiating to iron out the final details related to non-tariff barriers and matters related to the US tariff under Section 232 — finalised under the interim deal.
The official cited above also said that the government is examining the legal impact of the investigations launched by the US against India under Section 301(b). “These investigations take time. Whenever the deal is signed, it will take care of these notices,” the official said.
Last week, the US Trade Representative (USTR) initiated investigations against 60 countries, including India, to determine whether they failed to stop imports of goods produced with ‘forced’ labour. It also announced the launch of tariff-related investigations against 16 trade partners, including India, accusing these countries’ “structural excess capacity and production in manufacturing sectors” of adversely affecting America’s reindustrialisation efforts.
Commerce Secretary Rajesh Agrawal said that India remains engaged with the US side for a mutually beneficial trade agreement. “Pursuant to the US Supreme Court judgement invalidating reciprocal tariffs, the reciprocal tariffs are no longer in force. The US Government has issued executive orders imposing 10 per cent tariffs pursuant to Section 122 of the Trade Act, 1974 on certain products from all countries,” Agrawal said.
Meanwhile, data released by the Department of Commerce showed that exports to the US contracted nearly 13 per cent year-on-year to $6.89 billion in February. On a cumulative basis, exports grew 3.8 per cent to $79.29 billion during April–February.
