Modi, Trump agree to start talks for 'bigger trade deal', add legal framework to understanding reached so far

Even as they could not ink the much-anticipated trade deal on Tuesday, Prime Minister Narendra Modi and American President Donald Trump agreed to add a legal framework to the understanding the interlocutors of India and the United States reached so far.

Though the limited-scope pact could not be finalized before the meeting between Prime Minister and United States President in New Delhi, the two leaders agreed to work out a more comprehensive trade agreement in future and announced launch of negotiation for the “bigger deal”.

A trade deal was expected to be among the big-ticket deliverables of the US President's visit to India, but it had to be taken off the table for now as negotiators led by Commerce Minister Piyush Goyal and US Trade Representative Robert Lighthizer failed to narrow differences between the two sides.

“As far as bilateral trade is concerned, our Commerce Minister and United States Trade Representative have had very positive discussions,” Modi said, as he and Trump addressed mediapersons after holding talks at Hyderabad House in New Delhi. “President Trump and I, we have both agreed that the understanding reached by our commerce ministers will take it forward to give it a legal shape.”

“We have also agreed to initiate negotiations for a bigger deal. We are confident that this will yield good results that will be in our mutual interest,” Prime Minister said. “Over the last three years, our bilateral trade has witnessed double-digit growth and it has also become more balanced. Whether it is energy, civil aircraft, defence, or a higher education, over the last four or five years, just these four sectors has contributed $ 70 billion to the relationship between India and the US”

India-US bilateral trade has been growing at an average rate of 10% year-on-year and grew from $ 100 billion in 2014 to $ 160 billion in 2019.

But, ever since Trump took over as American President in January 2017, the US has been complaining about the imbalance in its trade with India. Trump in February 2018 expressed his displeasure over high import duty imposed by India on motorcycles like the ones made by Harley-Davidson and other US companies. During his visit to New Delhi in May 2019, American Secretary of Commerce, Wilbur Ross, pointed out that the US was India's largest export market and accounted for about 20% of its total export. Yet, he added, India was only the 13th largest export market of the US, “due to overly restrictive market access barriers”.

“Another major focus of my discussions with Prime Minister Modi is forging bilateral economic relationships that is fair and reciprocal. Our teams have made tremendous progress on a comprehensive trade agreement and I’m optimistic we can reach a deal that will be of great importance to both countries,” Trump said on Tuesday. “Since I took office, US exports to India are up nearly 60 % and exports of high-quality American energy have grown by – Thank You very much – 500 %. That’s great.”

“The United States has to be treated fairly and India understands that,” he added, while addressing media-persons in a press-conference later.