US envoy to India: We don’t have enough vision for a trade relationship

Even as India emphasised on Thursday that Washington and New Delhi are inching closer towards a smaller trade deal, the US is pushing for the signing of the Free Trade Agreement (FTA) to harness the full potential of the economic relations between the two countries.

Both the Indian envoy to the US Ambassador Taranjit Sandhu and US Ambassador to India Kenneth Juster participated in an interactive virtual session on ‘Partners in Revival: Time for Action’ at the India Global Week, moderated by Mukesh Aghi, president and CEO, US-India Strategic Partnership Forum.

Referring to India backing out of the Regional Comprehensive Economic Partnership (RCEP), the US envoy said India’s distance from an economic grouping with the Chinese in it was emphasised because of the recent border tensions between the two countries.

Engrossing discussion today with @USAmbIndia moderated by @MukeshAghi at #IGW2020 on comprehensive India-US partnership and working together to realize its full potential. pic.twitter.com/BCaj1hXGU2

— Taranjit Singh Sandhu (@SandhuTaranjitS) July 9, 2020

“It is more important as we have come out of the Covid-19 lockdown period, India has made a clear decision not to participate in the regional agreement with the Chinese and other nations in Asia (RCEP). Some of that has been emphasised by the recent disputes on the border area”, he said.

Pushing for the greater movement of trade Juster said, “In my view, to really lock in the economic potential going forward is to a Free Trade Agreement (FTA). We are now India’s largest market for trade and investment and you want to lock that in.”

To a question on when will the two sides sign a trade deal, the Indian envoy said, “There are a lot of areas, it is not just that only India has to send out a message of symbolism, I think this is a case of US too. This is a time to send out that message of balancing, of a win-win situation. Therefore, I hope both trade sides are able to finalise the smaller deal soon,” he added.

The US and India have also been negotiating for Washington to restore the trade benefits for New Delhi under its Generalised System of Preferences (GSP), which was suspended in June last year.

But the US envoy made a larger point saying if India has to give some to get some. While India wants GSP restored, it would have to also come across as a country open to “free trade”.

Hinting on opening its markets to the US, Juster said, “It is important, not as a concession to United States, but to signal to the world that India is open to trade and investment and can be a global hub for manufacturing and part of the supply chain. If we can achieve that then that would give optimism to launching a more comprehensive deal.”

“I do worry at times that we don’t have big enough vision for a trade relationshipwe would love to do a bilateral free trade agreement. We still get hung up even on this small interim agreement. We need to have reciprocity, but I think coming out of Covid-19, where economic growth is needed, having a trade agreement will really add impetus to the possibility of growth,” Juster said, seeking reciprocity in the form of an FTA for restoration of GSP.

A direct response to the push for FTA came from the Indian envoy when he said that this was the opportunity to reflect together and “accommodate” each other’s “interests” and “address” mutual “concerns”.

Sandhu said, “Trade and investment cooperation without doubt is an important dimension in our comprehensive global strategic partnership. Our bilateral trade has been growing at more than 10 per cent on a year-to-year basis While this growth is impressive, there’s no doubt that real potential is yet to be reached. Trust, partnership and cooperation with reliable partners will be the way forward… it is important to accommodate each other’s interests and to address issues of mutual concern. There is opportunity in every crisis, including this one. This is time to reflect together on the global supply chains and how they can be refashioned and made more robust to withstand such crisis in the future.”

Both sides also spoke about PM Modi’s call for self-reliance (Aatmanirbhar Bharat) where in the American diplomat said, “I hope this means building a more resilient and stronger local economies that can participate more ably in the global economy.”

PM Narendra Modi earlier on Thursday at the very same forum as the keynote speaker had said, “India remains one of the most open economies in the world. We are laying a red carpet for all global companies to come and establish their presence in India. Very few countries will offer the kind of opportunities India does today.”

PM Modi added, “Aatmanirbhar Bharat is not about being self-contained or being closed to the world. It is about being self-sustaining and self-generating. India awaits all.”

‘Time for India, US to become tech leaders’

Juster also said there was no better time for India and the US to become technology leaders. “Our countries together can forge an economic partnership that is every bit as robust as the military partnership as equally strategic because you need to have a thriving economy that is creating jobs and growth and resources. That would be mutually beneficial,” he asserted.

Discussing the importance of cooperation in the field of health and medicine, Sandhu said the Covid crisis had brought the two economies closer to ensure greater cooperation in the health sector.

“The US and India have a history of collaborating in the production of medicines We are collaborating on three vaccines for Covid-19,” he said.

Sindhu also added seven Indian private firms are collaborating with Gilead for the bulk production of Remdesivir, touted as the best therapeutic hope against Covid, which will be distributed to more than 126 countries.