US-India Tensions Still Loom Large as Two Sides Prepare to Meet, Trade Expert Says

U.S. and India face significant trade tensions that won't be easily solved, a trade expert said, adding that India’s Prime Minister Narendra Modi has taken more steps to close off trade than the country’s past two leaders. “I get asked, is India the next [U.S.] target?” said Rick Rossow, a senior adviser for U.S.-India policy at the Center for Strategic and International Studies. “Those of us that are in the trenches, there are already bombs dropping. There are already bullets whizzing by. It's pretty serious.”

Rossow, speaking during a Sept. 18 panel discussion at The Heritage Foundation, said he’s unsure if the two sides will reach a consensus when they meet on the sidelines of the United Nations General Assembly in New York later this month. Trade tensions have escalated between the two countries over the last year, including moves such as President Donald Trump’s decision to remove India from the Generalized System of Preferences benefits program (see 1905310071) and India’s retaliatory tariffs in June (see 1906170053).

Rossow said a big question is whether India is willing to agree to a one-sided trade deal wherein “India makes concessions and the United States does not.” “I think both sides have been teeing up more arrows than looking for solutions in recent months,” Rossow said. “I’m fascinated to see what actually transpires in New York.”

Rossow was critical of India’s approach to trade, saying Modi “is the least pro-trade prime minister India has had since liberalization began,” pointing to the country’s 2018 budget in which customs duties were doubled on about 50 product groups, including cars and cosmetics. “Modi has taken more steps to close the market on trade than either the [Atal Bihari] Vajpayee or the [Manmohan] Singh governments,” Rossow said. This has led directly to countermeasures from the U.S., Rossow said. “This was fuel that this administration was certainly going to use,” he said. “This is not going to be given a pass like it might have been with previous administrations.”

Oddly, Rossow said, the tensions have not negatively impacted trade between the two countries. U.S.-India trade exceeded more than $90 billion in roughly the last year, Rossow said, with exports increasing by more than 20 percent. “When you double customs duties, when you slap new tariffs … you can’t do these things without having an impact on trade,” he said. “Somehow we are defying gravity.”

This has specifically benefited U.S. exporters, Rossow said. “A lot of American companies are finding India to be one of the fastest growing export markets in the world right now,” he said.

While achieving a trade deal soon might be difficult, Rossow said the U.S. and India can find common ground on China, which he said has taken solar production away from the two countries and plans to “drive global adoption” of their technologies in medical devices and robotics.

“Find something -- maybe China, maybe something else,” Rossow said. “We’ve got to find something our strategic and economic communities can agree on and that is a challenge that we both share, and begin working from there.”