Energy and momentum

Govt must move forward on trade deals with US and others

According to Commerce Minister Piyush Goyal, India and the US are close to signing a “quick” trade deal. He said all that would be needed are “another couple of calls” to sort out some remaining issues. This followed a discussion between Mr Goyal and his American counterpart, Wilbur Ross. According to the official readout of the conversation, the “desire to conclude [a] limited trade package” was expressed by both sides. Trade had also been on the agenda when US President Donald Trump visited India in February this year and said that he and Prime Minister Narendra Modi could reach “a good, even great deal”. This messaging is welcome, and it will hopefully be followed through with swift action. After all, the US is India’s largest trading partner, with bilateral trade touching $88.75 billion in 2019-20.

The problems plaguing economic relations between India and the US are relatively minor, given the stakes for both sides and for India in particular. India must recognise the need to make concessions in keeping with its own high expectations of any deal. It will require, among other things, a very close degree of regulatory interaction. The two commerce ministers had apparently discussed one such issue — a US ban on Indian raw shrimp because fishing rules in this country were believed by US regulators to not protect wild turtles sufficiently. This would no doubt be sorted out by a working group of the appropriate regulators. There are other such minor irritants that can be settled by a proper whole of government approach — which would require the specific attention of the Prime Minister’s Office. For example, questions about the import of dairy products from the US are amenable to compromise. India’s hard line on preventing dairy imports that contain bovine material should be solved by labelling rather than a ban. For India, which has been the subject of too much negativity in Washington of late, partly as a consequence of its own policies, the need is great. The pandemic is providing an opportunity for many countries to reset their trade relations in order to corner a greater share of world trade. India cannot be left behind at this crucial moment. It is to be hoped that New Delhi’s negotiators are also keeping in mind the specific political constraints faced by the Trump administration. The US president is fighting a difficult re-election battle, and there will be pressure on him to demonstrate results for his hard line on trade deals.

What Mr Goyal insists is great energy and momentum in addressing Indo-US trade ties must also spill over to other pending agreements. The negotiations with the European Union on a free trade agreement, for example, have been hanging fire for too long, again on sectoral issues that should be sorted out in the larger interest. What is important is that New Delhi recognises and openly states the need for more access to foreign markets — which comes, of course, with greater openness at home. Freer trade benefits both sides, and particularly Indian consumers. It should be accompanied with competitiveness-enhancing reforms domestically, such as the prime minister had promised were on the agenda in the speech in which he launched “self-reliant India”. The Covid-19 crisis and the growth slowdown are the moment in which India must once again embrace globalisation.