India-EU Agreement Likely Pushed US To Make Trade Deal

NEW YORK, NY-India’s new free trade agreement with the European Union could have pushed the US to finalize a trade deal with India, according to a South Asia expert at the Asia Society here.

“Though India-US trade negotiations were on for a while, the deal with the EU could have served as an impetus for the US to push forward,” Farwa Aamer, director of South Asia Initiatives at the Asia Society Policy Institute, said on February 2.

“The timing is interesting as the deal comes straight after the EU-FTA,” she added.

According to the White House, the US will also drop the punitive 25 per cent tariff that Trump had imposed on India for purchasing Russian oil.

The breakthrough came after about a year of negotiations between the two countries, which were at times rocky.

“For India, the Russia question remains,” Aamer said. “Even though it has and will change its oil import structure away from Russia, India would still want to keep relations steady.”

The agreement was announced after a phone conversation between Prime Minister Modi and President Donald Trump. “It was finally the leadership-level engagement that we have been talking about since the beginning that was able to bring the deal around,” Aamer said.

Another expert with high-level trade experience, Wendy Cutler, said the deal between India and the US would give India an advantage over its Southeast Asian competitors.

“Importantly, the US reciprocal tariff for India will be reduced to 18 per cent, giving Indian exporters a slight edge in the US market over its ASEAN competitors who have secured 19-20 per cent tariffs,” she said.

A former acting Deputy US Trade Representative, Cutler, who is the senior vice president of ASPI, said it was likely that the US secured a better deal than the EU.

On India’s cuts to tariff and non-tariff measures affecting trade, she said, “Trump’s language gets vaguer, only conveying that India ‘will move’ to zero percent.”

“However, based on the language of the Truth Social post (by Trump announcing the deal), it does seem likely that the US secured deeper and broader tariff cuts than the EU achieved in its recently announced FTA with Delhi,” she added.

While tariffs on EU exports in some categories, such as electronics and machinery, would be eliminated over time, others, including alcoholic beverages, would be reduced to 20 per cent.

Trump said on Truth Social that India will “move forward to reduce their Tariffs and Non-Tariff Barriers against the United States, to ZERO.”

Overall, Cutler said the India-US agreement “will help clear the pathway for the US and India to work cooperatively on other pressing matters concerning critical minerals, technology cooperation, and supply chain resiliency.” (IANS)