Change in US administration may delay free trade agreement with India: USTR

NEW DELHI: United States Trade Representative Robert Lighthizer on Wednesday said a small deal with India could be possible but indicated that a full-fledged free trade agreement (FTA) could get delayed by a change in administration. At the CII Partnership Summit, he also said that high tariffs, agriculture and bureaucracy are impediments to a large trade deal. He also said that India is an alternative and a competitor for China and Vietnam when it comes to manufacturing.
“In terms of how long it takes to do a deal, we have one deal which is on the smaller side, my guess is that we are not that far away from the deal like that and keeping in mind obviously we have a political change going on over here and that is going to be a bit of a set back… certainly to an extent that I can facilitate, I will be happy to do it…but there is going to be some change and my guess is that it will slow things up,” Lighthizer said.

Referring to India’s trade talks with the EU and the RCEP, he said: “In terms of a major deal, the kind of deal that your minister and our boss would like to be in concept, my guess is that that will take a while, my guess is that that is not going to happen anytime soon but I think just working on it is helpful.”

Lighthizer, in a chat with President-Denews24nationate CII T V Narendran, said that India has one of the highest tariffs in the world.

He said all tariffs in the US are bound and at a 3% level but India has only about 75% of the tariffs bound and the bound rate is about 50%. Moreover, India’s effective tariffs are five times the US, he said.
“Tariffs are a problem… There are a lot of things that India could buy from the US and does not because of very very high tariffs,” he said.

Even as he said the US can’t have a relationship where “one country has tariffs that are five or six times higher than theirs and sometimes 100% versus 2%,” the USTR asked India to be realistic when it came to tariffs.

“I think India has to come to grips… to reduce tariffs on an awful lot of things or you are not going to have the kind of real trade relationships you want with the US and others,” he said, adding that though bilateral trade has gone up dramatically in the last five-six years, the deficit has not really gone down.

On asked about whether India’s move to open up investments making up to some extent for the tariff point that the US is making, he said: “No, I don’t think it does at all. I think they are total independent things”.

Lighthizer also said that another impediment is agriculture and the brand issue that “we have to come to grips with is that India’s famous for having a very strong bureaucracy”.

There is a toughness and independence about the bureaucracy which makes reform in some areas more difficult than it probably ought to be, he added.