Jaishankar says India-US trade deal could contribute to better bilateral ties

A trade agreement between India and the US, if concluded, would contribute to “better” bilateral ties, External Affairs Minister S Jaishankar said, noting that expectations of rapid progress in negotiations had been “tested” against a much more complex ground reality.

Jaishankar addressed prominent members of the Indian-American and diaspora community as well as policy experts on Monday at a special conversation hosted by the Asia Society, as the high-level week of the 81st session of the UN General Assembly concluded in New York.

During a conversation moderated by former American diplomat and distinguished fellow at the Asia Society Policy Institute Daniel Russel, Jaishankar was asked about India-US relations, particularly developments related to trade and tariffs over the past year, and what would have to happen to put the bilateral relationship on a “better track”.

“Well, I think if I stand back and look at the relationship,... I note that much of the world has had a more difficult relationship with the US. I mean that may not be a consolation, but that's a reality,” Jaishankar said.

He said one of the issues facing India-US ties was the trade negotiations.

Pointing to the “stakes” and “complexity” involved, Jaishankar said, “Bear in mind, India is a society of small producers, small agriculture producers, small factories. Apart from the per capita gap between India and the United States, the nature of production, nature of society is very different.”

“A trade negotiation required a certain amount of ... patience and detailing to see it through… The expectation that it could rapidly move forward, I think, was tested against a ground reality which was much more complex,” he said.

Jaishankar added that “today, we have reached a situation where there is more or less an understanding on the trade agreement”.

India and the US had in February announced the finalisation of the framework for the first phase of the bilateral trade agreement. However, changes in the US tariff landscape have led to further negotiations on the pact.

The US Supreme Court had earlier struck down US President Donald Trump’s reciprocal tariffs imposed under emergency powers, prompting Washington to adopt a different tariff framework. In July, the US imposed an additional 10 per cent tariff on imports from India under Section 301 of the Trade Act, following a probe into India's measures concerning goods produced with ‘forced labour’.

The two sides have since continued negotiations on their bilateral trade agreement amid the changes in the US tariff regime. 

Jaishankar, alluding to comments by Commerce and Industry Minister Piyush Goyal, said the issue now was what had changed on the American side and how the new Section 301 process would affect the agreement.

“The 301 process is still in the works, it's still unfolding. So the issue for us is at what point do you close out an agreement which is very, very far advanced,” Jaishankar said.

“But the period that it took to reach it, that did create bumps last year for the relationship. So presumably, if that agreement is closed out, that would be one point which would contribute to a better relationship,” he said.

Jaishankar also said that, to some extent, bilateral ties were impacted and influenced by developments within the US.

“For many years mobility was seen as an economic gain. Now, today the economics of mobility and the politics of mobility are at odds with each other,” he said.

He said foreign policy or diplomacy today was not just conducted by states, leaders, ministers or diplomats.

“In a social media era, there is a very big public opinion factor,” particularly how it plays out in democratic societies, he said.

“So I think that's a reality we have to take into account. So yes, we would certainly hope for and expect the relationship to move on an upward trajectory. But I have to be real about the issues that we confront, and to the extent we are able to move ahead on some of these issues, I think we'll have a better relationship,” he said.

Last week, Goyal had said the trade pact between India and the US was “done and dusted” and would be executed once the US gives India the right competitive advantage over its competitors in the American market. India's competitors in the US market include ASEAN countries, China and Bangladesh.

Goyal will visit the US from September 29 to October 5 to attend a G20 meeting in Milwaukee and hold discussions with US Trade Representative Jamieson Greer on advancing talks for the bilateral trade agreement.