December 1, 2021

The World Stock Markets Tips & Targets, News, Views & Updates

The World Stock Markets Tips & Targets, News, Views & Updates

Trade talks: India, US to expand agri market access

Trade talks: India, US to expand agri market accessTrade talks: India, US to expand agri market accessTrade talks: India, US to expand agri market access

India and the US agreed on Tuesday to ensure greater market access in certain farm commodities, continue their engagement on the critical visa issues and facilitate the movement of skilled professionals, as the two sides held the trade policy forum (TPF) meeting after a gap of four years to provide a fresh impetus to bilateral trade.

Both commerce and industry minister Piyush Goyal and US trade representative Katherine Tai, who co-chaired the TPF meeting, agreed to pursue a social security totalisation agreement. The decision to work towards freer movement of professionals and the totalisation pact, long sought by New Delhi mainly to protect its IT industry against US’ non-tariff barriers, seemingly marks a departure from the stringent US policies in recent years, especially under the Trump administration.

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Domestic IT firms pay over $1 billion a year to comply with the social security norms for their Indian employees in the US despite the fact that these people don’t work there long enough to be eligible for such benefits. A totalisation agreement removes dual social security taxation. However, the US has remained non-committal on a complete restoration of the GSP (Generalised System of Preferences) benefits to India. Under GSP, India could ship out duty-free goods worth $6-6.5 billion a year (but the potential tariff forgone by the US was only $240 million in 2018).

“…the US noted that this could be considered, as warranted, in relation to the eligibility criteria determined by the US Congress,” according to a joint statement after the meeting.

Bilateral goods trade between the US and India is expected cross $100 billion for the first time in FY22, against about $81 billion in the last fiscal when the pandemic hit the supply chains.

Interestingly, both the sides agreed to further engage to find mutually-agreed solutions on outstanding disputes at the World Trade Organization (WTO), just days before a ministerial meeting of the global trade body is to commence (from November 30).

The two sides emphasized on the collaboration of the private sector in both the countries in building stronger linkages in critical sectors — including cyberspace, semiconductors, AI, 5G, 6G and future generation telecommunications technology — and supporting resilient and secure global supply chains.

Both the sides agreed to finalise market access facilitation for mangoes, pomegranates and pomegranate arils from India, and cherries and alfalfa hay for animal feed from the US. They also decided to resolve market access issues for Indian grapes and American pork and pork products.

New Delhi also highlighted the delays in US regulatory inspections of Indian pharmaceutical facilities.
Both Goyal and Tai agreed to utilise the revitalised TPF and its working groups as a means of rapidly engaging on fresh trade concerns as they arise, and that they would evaluate the progress in this regard at quarterly intervals.
The US offered to export ethanol to support India’s lofty goal of reaching 20% of ethanol blending with petrol by 2025.

Recognising that legal, nursing, accountancy and electronic payment services can facilitate growth in trade and investment, both the sides agreed to promote engagement in these sectors.

Both the countries pledged to deepen bilateral engagement to promote the digital economy, and to explore the adoption of joint principles that ensure that the internet remains open for free exchange of ideas, goods, and services.

The TPF Working Groups, comprising officials from both the countries, have been asked to develop, by March 2022, plans of action for making substantive progress. Senior officials would remain would regularly review the activity of the working groups and identify a set of specific trade outcomes that could be finalised for an inter-sessional TPF meeting to be held by mid-2022.

Both the sides highlighted the importance of trade in creating employment and opportunities for working population and the relationship between trade and environment matters. They also exchanged views on approaches to increase the utilization of renewable energy and other clean technologies to achieve net-zero emissions, including by aiming to mobilise finance and scale innovative clean technologies as agreed in the India–US Climate and Clean Energy Agenda 2030 Partnership, according to the joint statement.

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