Trump's India visit: Major trade deal between India and US seems unlikely

Even as US President Donald Trump is all set to arrive on February 24 for his first official trip to India, both countries are doubtful about ironing out critical differences and concluding a major trade deal. US trade representative Robert Lighthizer was expected to travel to India ahead of the presidential visit to meet Commerce Minister Piyush Goyal in an attempt to resolve trade disputes and prepare a major deal for Trump to sign during the visit. That is unlikely to happen as Lighthizer has put his visit on hold. Both countries now look at a “mini trade deal”, which could serve as a starting point for an extensive agreement to be concluded at a later date.

Trump is unhappy about a range of issues that dominate India-US trade. For instance, he has been targeting countries which run a trade surplus with the US. India, with a trade surplus of $23.3 billion in 2019, ranks 11th in the list, which is headed by China. The surplus has been one of the reasons that prompted the US to impose a 25 per cent tariff on steel and 10 per cent tariff on aluminium under section 232 of the US trade expansion act, which allows the president to restrict imports citing national security concerns.

Last year, the Trump administration eliminated preferential tariffs to Indian exports under the Generalised System of Preferences (GSP) after American dairy and medical technology industries complained that they were denied “equitable and reasonable access” to the Indian market. The move cost India $6.3 billion to which it responded by imposing higher tariffs on US exports on products worth $1.4 billion, covering stuff like almonds, cashews, apples, chickpeas and wheat.

While trade surplus is an issue which India is confident of resolving, an even more vexing issue that is hurting trade ties is in the realm of intellectual property (IP) rights. The US feels that Indian IP laws are lax, while India believes it is only promoting innovation to keep prices of essential items like drugs and medical devices affordable. Days before Trump's visit, the US Chamber of Commerce's Global Innovation Policy Center has released its International Intellectual Property Index in which India is placed 40 among 53 countries. While the GIPC acknowledges that India has made significant progress in protecting IP rights, the report indicates that it still has a long way to go.

While Trump is in India, there will be a great deal of pressure on Prime Minister Narendra Modi to convince him that as a developing country (though the US has classified India as a developed nation to suit its agenda) with a population of 1.5 billion, it will not be able to adhere to a strict interpretation of the western norms of concepts like intellectual property rights. The government is already under scrutiny for its perceived attempts to follow global standards on IPR issues. For instance, after the department of promotion of industry and trade recently convened a meeting to review India's existing intellectual property rights laws and also keeping in mind the renewed American attempts to abandon price controls for drugs and medical equipment, 30 prominent academics and activists wrote to Modi, asking him to ensure that public health policies are kept outside the purview of trade agreements.

Congress MP T.N. Prathapan recently wrote to Modi in this context, seeking the prime minister's help to ensure speedy and affordable supply of medicines to treat multi-drug resistant TB, as India accounts for 24 per cent of global MDR-TB cases. Two new drugs available for treatment—Bedaquiline and Delamanid—are protected by patents and, therefore, do not have generic versions. A six-month course of Bedaquiline will cost around Rs 30,000, while Delamanid at Rs 1.2 lakh is even more expensive. Prathapan asked Modi to include both medicines in the national list of essential medicines and take steps to ensure their generic production.

But forward movement on trade concerns may be tough for India as the US under Trump has been less than willing compared with past American administrations in granting concessions on the trade front in exchange for favours on geostrategic issues. Trump perceives foreign policy issues like business transactions and expects instant profits, which makes long-term deal-making almost impossible. Modi and his team are going to have a tough time ahead in negotiating a deal that can address Trump's concerns and protect the rights of millions of underprivileged Indians.