India on Donald Trump’s comment
Highlighting against the backdrop of Donald Trump’s claims to increase tariffs on all imports, India stated that America is an outstanding and trustable partner, India also added that such statements related to tariffs made during elections do not resolve ties, and emphasizing to the Narendra Modi- led government’s ties with three different US administrations suggested that relations will continue to get better not matter how much effective is the electoral outcomes of US.
Piyush Goyal who is the Commerce and industry minister explained the logic behind Indian tariffs to Trump’s team, which hints at a ray of a defensive measure against China’s practices. Goyal went on suggesting the most favourable way for other countries to abandon the same tariffs that apply under the most favoured nation (MFN) status which is through a free trade agreement (FTA), putting it back to the US where such a pact is not possible at the moment.
Piyush Goyal’s opinions
On Thursday, at a press conference in Washington DC, Goyal stated that if the US should be seen as an unreliable trade partner, following Trump’s promise at the campaign of increasing tariffs by 20% on all imports, and followed with former US trade representative Robert Lighthizer’s comments regarding India being the most protagonist country in the world in which policies were figured out by 15 oligarchs. In September during a campaign rally, Trump called India a big abuser of trade.
Goyal went on saying out loud and clear on record that India considers US as one of the most reliable and outstanding trade partners with whom India is increasingly expanding relations along with trade, services, technology, investment. This relationship is deeply valued. Goyal stated that comments passed on during an election does not determine relations. He went on saying that under the Modi government, India developed excellent relations with Barack Obama, Trump and Joe Biden administrations, and India would continue having great relations with the US.
Picture credit: Hindustan Times
First Goyal called Lighthizer a “friend” who is Trump’s top trade czar, with whom he had a chance to develop relations after becoming commerce minister in 2019, and after that provided the most brief Indian response to Trump’s tariff threats, which is reflected by his view of reciprocity and claim that other countries apply tariffs on American products.
He said that regarding tariffs there was a discussion with Bob in explaining to him that each country safeguards certain goods and items based on offensive action of certain other countries. He provided the example of the US proposing a tariff of 163% on peanut farmers, which is a defensive protective measure to its farmers.
Goyal stated that in an MFNised world, a country also has to keep an eye on who was dumping products, who have non- transparent and opaque pricing systems that’s the medium through which they are sending products, and then safeguard the domestic manufacturing industry from indiscriminate imports that are normally substandard but irrationally priced. This was viewed to be a reference to China and seemed to be a way to refer to American trade as a hawk that India’s tariff policies were aimed elsewhere. In such cases MFN rates are imposed on all and some countries may find to be hurting them.
In reference to this, Goyal stated that the best way for India and the US is to do an FTA, emphasizing India’s recent agreements with the UAE, Australia, and a group of European agreements, along with the last trade pact also having an in-built investment commitment. In order to reduce the constraints of MNF- based tariff structure, we should be working for bilateral relations. One can’t have higher taxes for one country and lower for another country other than through this system. Goyal said that Bob understands this very well, which is again referring to Lighthizer.
Picture credit: NDTV World
Goyal stated that he also explained to counterparts in America that if India decreases duties of imports on products which are of interest to the US, it is supposed to be on an MFN basis, and so the advantages should go to a third country since US products have higher prices. He said that even if the intentions are to help America and American business, the advantage might not go to them and might go to another country. He then went on giving examples of a product for which India was willing to decrease import duties, but the company for which the duty was supposed to be reduced persuaded fot it not to happen. Tis was due to the reason that the company had begun manufacturing in India and realised that reduced duties would have led to a third country dumping items.
Goyal said that the answer to high tariff debate is based on MNF and a solution is also there which at some point of time US and India may consider.
