Trade dispute to defence: Modi, Trump have talks agenda set at G20 meeting

G20 talks between the two leaders set the tone for early India-US meeting on trade package

The trade ministers of India and the US are set to meet “at an early date’’ in an attempt to resolve thorny issues between the two countries. The decision was taken at a bilateral meeting between Prime Minister Narendra Modi and US President Donald Trump on Friday, on the sidelines of the G20 summit in Osaka, Japan.

Ahead of the much-anticipated meeting, Trump made headlines when he said big deals between the two countries were round the corner. “I think we’ll continue to get along with India. We’re going to have some very big things to announce, very big trade deals,” the Wall Street Journal quoted Trump as saying. There were no details available on the deals. 

Modi listed four issues—Iran, 5G communications networks, bilateral relations and defence ties—to be discussed with the US, according to a Bloomberg report from Osaka. Any dialogue on 5G service is of immediate interest to India as the country will shortly start a trial run for this. A decision on whether to allow Chinese equipment vendor Huawei to participate in the 5G trial or not will possibly hinge on the direction of the talks between Trump and Modi at the G20 meeting. Trump and Modi met in the backdrop of growing tension between the US and India over tariffs. 

On June 16, India had raised import duties on 28 high-value American exports by up to 50 per cent as a response to the US hiking import duties on aluminium and steel earlier. A day before the Osaka meeting, Trump had asked India to withdraw the tariff hike, terming it “unacceptable’’.

With Trump keen to discuss trade issues in Osaka, time had to be cut short for talks on defence on Friday, Foreign Secretary Vijay Gokhale told the media. The two leaders discussed ways to develop and market American 5G technology in India, Gokhale added. He didn’t mention Huawei. 

Data localization

Trump and Modi also discussed issues related to data protection. Later, briefing the media, Gokhale said data was a “form of wealth’’ and that requirements of developing countries must be taken into account. 

Trump opposed data localisation and policies restricting digital trade, agencies reported. 

Following India’s policy on data localisation, US tech firms such as Google and Amazon and financial majors including Mastercard and Visa have continued to protest the rules.

While pointing out that data was a major issue, Gokhale said, it should be discussed within the World Trade Organisation (WTO) context and not outside it.

Earlier in the day, Trump had openly opposed data localisation. ‘’The US opposes data localisation and policies which have been used to restrict digital trade flows and violate privacy and intellectual property protection," he said. Also, without mentioning Huawei, Trump said,  "We must ensure resilience and security of our 5G networks, it's essential to our shared safety and prosperity.’’ The US has banned Huawei over security issues.

New trade package

Commerce Department sources said while tariff issues would require time, the upcoming talks between the ministers may see India getting back to the discussion table on a comprehensive trade package with the US. While the trade ministers of the two countries are expected to meet for this, a final decision on the level of participation is yet to be taken. 

In the works for more than a year now, the package hopes to secure a mutual list of exports, import duties on which can be reduced and market access enhanced. As many as six bilateral discussions have been held by the Commerce Department with the US Trade Representative's office and the Department of Commerce. Mutual trade concessions across IT goods, aviation and oil purchases have been part of the package.

But after repeated threats from Trump on India's protectionist steps, New Delhi had decided to go slow on the proposed ministerial talks on a trade package.

US Secretary of state Mike Pompeo had focused on the proposed package during his recent India trip. That seems to have paid off. "He secured a go ahead from the Prime Minister's Office,’’ a source in the know said.

However, officials said the basic contours of the package must be renegotiated as trade experts had said the earlier terms were favourable to the US without helping India.

Balancing US deficit

New Delhi had considered dismantling of its current price cap regime for coronary stents with a trade margin policy, and agreed to concede lower duties on import of certain information and communication technologies products such as high-end mobile phone and smart watches from the US.

"Cheaper access to oil from Texas along with a broad range of trade concessions were offered by the American side," another official said. On the issue of crude trade, Modi on Friday pointed out India’s energy concerns. He said although Iran supplied as much as 11 per cent of India’s energy needs, New Delhi had reduced oil imports from the West Asian country even as it hurt the Indian economy.

India is also the only major trade partner, with which the US trade deficit has gone down consistently. Annual figures released by the US authorities, a day after Washington DC snatched away India's trade benefits under the Generalized System of Preferences, showed America’s trade deficit with India had shrunk to $21.3 billion in 2018, from $22.3 billion a year ago.