US Trade Representative Jamieson Greer (left) and Indian Commerce Minister Piyush Goyal hold trade negotiations in New Delhi last month. [Reuters]
US Trade Representative Jamieson Greer (left) and Indian Commerce Minister Piyush Goyal hold trade negotiations in New Delhi last month. [Reuters]

A first-phase trade deal between the United States and India is in the final stretch but hitting last-minute snags, as New Delhi refuses to back down from its demand for more favorable tariff terms than those offered to rival manufacturers such as China.

Reuters reported Tuesday that the two countries held late-stage negotiations in New Delhi at the end of last month but failed to bridge differences on key sticking points, leaving a final agreement unsigned.

US Trade Representative Jamieson Greer visited New Delhi on June 23 and 24 for talks with an Indian government delegation. Both sides had expected to reach a tentative agreement at the time, but no deal was signed.

An Indian government official familiar with the negotiations told Reuters that "the United States did not guarantee India's core demands," adding that India had no intention of rushing into an agreement on unfavorable terms or yielding on red lines such as agriculture.

India's top priority is securing US tariff rates lower than those applied to competing manufacturing nations, including China. New Delhi is also pressing Washington for a firm commitment that no additional tariffs will be imposed after a deal is signed.

The US, for its part, has maintained that India must offer greater market access and concessions before Washington will extend preferential trade treatment.

A source familiar with the US side of the negotiations told Reuters that it remains Washington's consistent position that India must make more concessions to obtain the trade preferences it has long sought.

India appears to believe its negotiating leverage has grown, buoyed by rising exports and a string of recently concluded free trade agreements.

India's merchandise exports from April through June rose 15 percent from the same period last year, even amid the fallout from the US-Iran war. A free trade agreement signed with the United Kingdom last year is set to take effect Wednesday, and India concluded a separate FTA with New Zealand in April.

Commerce Minister Piyush Goyal said last month that negotiations on the first-phase trade deal were "99 percent complete," while stressing that the remaining issue — tariff rates — required India to secure lower duties than those facing competing manufacturing nations.

Indian Commerce Secretary Rajesh Aggarwal also said a basic agreement was ready and would be signed "when the time is right," signaling that the talks had not collapsed.

A US government official, speaking anonymously, said Washington was "continuing to work with India and expects a final agreement to be reached." The official suggested a quick resolution may be difficult, however, describing India's approach during negotiations as "slow, bureaucratic and demanding."

The two countries agreed in principle in February to a first-phase trade deal, under which the US would reduce the reciprocal tariff on India from 25 percent to 18 percent and withdraw the 25 percent punitive tariff it had imposed over India's imports of Russian crude oil.

Since then, the path to a final deal has been repeatedly delayed — first by a US Supreme Court ruling that found the reciprocal tariffs unlawful, and then by the Trump administration's Section 301 trade investigation.


sjy@heraldcorp.com