US assures India of lower tariffs than rival economies in trade deal: Govt official

The US has assured India of a comparative tariff advantage over rival economies under the proposed bilateral trade deal, with both sides aiming to conclude the first tranche by the end of the current financial year.

In Short

• First tranche is targeted for completion by current financial year-end
• Services issues will move to the broader agreement's second phase
• Final legal text will include annexures and customs facilitation chapter

The United States has assured India that it will receive a comparative tariff advantage over competing economies under the proposed bilateral trade agreement, a senior government official told news agency ANI on Saturday, even as negotiations on the first tranche and the broader pact continue.

"The US has assured India of a comparative tariff advantage over its competitors in the trade deal. We will have to see how the tariff framework unfolds," the official said.

However, the official cautioned that the extent of the advantage would depend on the final tariff structure. India is also awaiting the outcome of the second investigation initiated by the Office of the United States Trade Representative (USTR) against the country.

India aims to conclude the first tranche of the agreement by the end of the current financial year. Negotiations on the initial package and the broader Bilateral Trade Agreement (BTA) are progressing simultaneously, the official said.

Services-related issues will not feature in the first tranche and will instead be addressed in the second phase as part of the larger agreement.

The final agreement is expected to take the form of a legal text with annexures and include a dedicated chapter on customs and trade facilitation, the official added.

Earlier, another senior Commerce Ministry official told ANI that India and the US held discussions on customs and trade facilitation last week. A two-member US delegation visited India on November 2 and 3 for discussions on these issues.

The negotiations have been progressing in phases, with both countries seeking early gains through the first tranche while continuing discussions on more complex aspects of the broader agreement.

INDIA WILL HAVE ONE OF THE BEST TRADE DEALS: PIYUSH GOYAL

Commerce and Industry Minister Piyush Goyal on Thursday said India will have one of the "best" trade deals with the US in every respect.

He said that India has negotiated a very good set of outcomes with the US in the pact.

"And in every respect, India will have one of the best deals with the US," he told reporters here.

India and the US in February finalised a framework for the first phase of the bilateral trade agreement. However, changes in the tariff landscape in the US have led to further negotiations.

"Nations that make the same products and are at a similar level of development, like India. We will have the most preferred market access in the US post the deal in products of our interest," Goyal said.

When asked about a timeline for the pact, he said the agreement is under discussion and there are many factors which determine these outcomes.

About the visit of the US officials, he said that it was mainly a discussion with the customs authorities. "The Deputy Chief Negotiator had come for discussions with the customs department on one track," he said.

On the impact of India's trade pact on exports, he said: "It's too early to tell because, as you are aware, the 'mother of all deals', the EU agreement is not yet operational. The US will take some time before it comes into effect".

He also said that Guatemala and Ecuador too have shown keen interest in discussing separate trade pacts with India.

"India today is looked upon as the trusted partner of the world. Otherwise they would not be wanting to do trade agreements with India. They would not be looking to India as a part of their global value chains," he said.

A two-member team of US officials visited earlier this month for talks on trade and customs facilitation issues. Both sides are in regular touch on the finalisation of the first phase of the bilateral trade agreement (BTA).

India and the US have finalised the framework for the first phase of the agreement in February. However, changes in the tariff landscape have led to further negotiations on the agreement.

India is seeking lower tariffs for its goods in the US market than its competitor nations such as Bangladesh, Vietnam and Cambodia.

These remarks assume significance as US President Donald Trump suffered a crushing defeat in the mid-term elections.

When asked about the impact of the results on the trade pace talks, Goyal said: "We do not link our trade relations with internal elections or results of any kind".

The US has imposed an additional 10 per cent import duty on various countries, including India, from July 24. These tariffs follow a US investigation into forced labour issues under Section 301 of the US Trade Act of 1974. This duty is over and above the existing MFN (most favoured nation) rates.

When asked about the UK issue on whiskey, he said: "Whenever there is any new agreement, there are some operational issues. Probably this is one of those which is being sorted out".

- Ends