The U.S. and India recently announced a new effort to enhance the resiliency and sustainability of their trade relationship so it is “better able to withstand current and future global challenges.” Treasury Secretary Janet Yellen said recently that India could play a major role in the emerging U.S. strategy of “friendshoring,” in which the U.S. is deepening economic integration with trusted trading partners to diversify away from countries that present geopolitical, security, and other risks.
Among the most notable outcomes of a Jan. 11 meeting of the U.S.-India Trade Policy Forum in Washington, D.C., was the launch of a working group on resilient trade that will initially focus on the following areas.
- deepening engagement on trade facilitation, with a dedicated working session anticipated in the coming months that will include digitization of customs procedures
- the importance of benefitting workers and promoting sustainable and inclusive growth, including promoting labor rights and workforce development
- expanded dialogue on good regulatory practices, with an initial focus on procedures for developing rules and regulations
- the role trade can play in contributing to environmental protection and responses to common sustainability challenges, including issues related to mobilization of sustainable finance and scaling up of innovative clean technologies
- additional means of strengthening supply chain resilience, especially in critical sectors, and related cooperation with trusted partners
Also at the meeting India reiterated its interest in regaining beneficiary status under the U.S. Generalized System of Preferences, which was terminated in June 2019 in light of what the U.S. called “a wide array” of market access barriers. Prior to that time India had been the largest user of GSP, with $5.7 billion in shipments under the program in 2017.
As it has before, the U.S. responded that India’s request “could be considered, as warranted, in relation to the eligibility criteria determined by the U.S. Congress.” GSP lapsed on Dec. 31, 2020, and has not been reauthorized due to disagreements among lawmakers about whether to revise or expand the program’s eligibility requirements. Prospects for renewing GSP in the current Congress, where control of the House of Representatives has switched from Democrats to Republicans, remain uncertain.
The TPF meeting also saw the two sides highlight recent progress in addressing specific trade irritants, including trade restrictions, compliance burdens, and intellectual property protections. They exchanged views on “potential targeted tariff reductions,” though no further details were offered. They signaled their intent to increase talks on food and agricultural trade issues and to examine how greater cooperation in financial technology (e.g., electronic payment services) could contribute to a further expansion of bilateral trade.
TPF working groups are now expected to meet quarterly to “identify specific trade outcomes to ensure that the trade relationship begins to reach its full potential.” Senior officials plan to hold an inter-sessional TPF meeting by mid-2023 and the next ministerial meeting by the end of the year.
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