India-US deal: America sends warning signals of trade skirmishes

Washington: The head of an influential business advocacy on Indo-US ties has warned that forgoing a trade deal between the two countries will force the Trump administration to consider alternatives.

Observing that relationship does not work in silos, Mukesh Aghi, president of US-India Strategic and Partnership Forum (USISPF), said the alternatives could start with the suspension of Generalised System of Preferences (GSP) benefits and end with trade skirmishes over Twitter that hurt both the economies.

Last week, White House chief economic advisor Larry Kudlow said that discussions on a trade deal with India has begun. But he did not give any details. In recent weeks, President Donald Trump has said that India wants a trade deal with India and accused New Delhi of having excess of tariffs.

"Forgoing a trade deal will force the US government to consider alternatives, which could start with the suspension of GSP benefits and could end with trade skirmishes over Twitter that hurt both economies," Aghi told PTI.

Asked what will happen to India if there is no trade deal, Aghi said: "At the very least, negative signals will be sent to the current and potential investors. Some will claim that the failed deal shows that India won't budge on thorny issues that make it an unprofitable investment destination".

Not having a trade deal would might strain India-US relationship. "In the middle, there could be potential sanctions over Iranian oil and CAATSA. We want to avoid this route. We believe it is important to get these relatively minor differences resolved so that we can move on to a more productive dialogue," said the USISPF president.

Observing that some feel that one can deal with trade in one compartment and the strategic relationship in another, Aghi asserted that relationships don't work in silos.

"The highest levels of both governments are required to be present in order to sign off on big trade deals. If either side sours on such a deal, it will spill over into the strategic side of the relationship," he said.

Recently, so much has been accomplished on the strategic side of the US-India relationship from the CAATSA waiver that made it through the US Congress to the signing of COMCASA at the 2+2 Dialogue.

"The two sides should keep this positive momentum by inking a trade deal," he said. Formed a little over a year ago, the USISPF has been playing a significant role in fostering a robust and dynamic India-US relationship through policy advocacy that will lead to driving economic growth, entrepreneurship, employment-creation, and innovation to create a more inclusive society.

He replied in negative when asked if a deeper defence relationship with the US threatens India's strategic autonomy. "No, unlike other countries in the region, the United States is not making a play for control through its relationship with India," he said.

The United States' stated mission is a free and open Indo-Pacific. Pushing for a stronger India, as a balance against a more aggressive China, has been the goal of the United States under decades of administrations, despite party or political views, Aghi said.

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"The US is the one trustworthy companion that can help India counter threats in its region and ultimately foster a more secure world for us all.

"If you look at the other options, Russia cannot be trusted to supply and maintain defence equipment without demanding additional deals. China brings the possibility of border skirmishes as a constant threat and the Belt and Road Initiative as a long-term concern," he said.

A deeper defence relationship with the US provides India with extra insurance as China buys influence and strategic outposts from India's neighbours, Aghi added.