 Hello and welcome to NewsClick. The U.S.-India trade relationship has grown steadily over the years. In 1999, the total value of trade and goods and services was $19 billion. In 2018, it's now at $142 billion. But despite this, the trade relationship has been marred with disputes on several issues from tariffs in agriculture to intellectual property rights to tariffs on Harley-Davidson bikes to the H1B visa to India's policy on e-commerce. And maybe that is the reason why, when Donald Trump makes his maiden presidential visit to India on 24th and 25th of February, it looks highly unlikely that a trade deal will be secured. To find out the reasons for the impasse in terms of the trade deal, we have with us Dr. Biswajith Dar, who is professor of economics at New Delhi's Jawaharlal Nehru University. And we will speak to him about what has been happening on the trade front. Dr. Dar, welcome to NewsClick. It looks like in terms of the political and strategic front, the relationship is on an upward trajectory. But despite several months of negotiations to secure what has initially been called a small trade deal or an interim trade deal, reports indicate that this deal will not be secured when Trump visits New Delhi on the 25th. I want you to sort of put this in the context of balancing the political strategic with the trade relationship, but also in the broader economic context where you see a rise in protectionism, you see trade deals being hard to secure. The US is withdrawn from many trade deals. The WTO is at an impasse. India is also withdrawn from the mega FTA, RCEP in November. So, how do you sort of see this in a sort of broader context? Yeah, I think you just said the context because India-U.S. relationship is particularly strange, I would say, for want of a better word. Because if you look at the political strategic side, then for the past more than a decade now, since the signing of the nuclear deal, the relationships have been just moving in one direction. They have been going up. And India is now firmly with the United States on most international issues. And so, many of the past differences have been ironed out. But if you just turn and look at what is happening on the economic issues and the economic relationship, I think it had always been contentious. And in the past few years, I think the level of contentions have gone a few notches higher. So, we have a strange dichotomy between the political-stroke-strategic relationship and the other economic relationship. And to my mind, it is happening because of several factors. The first is that India is one of those countries having very large market with whom U.S. actually has a trade deficit. And conversely, one can say that U.S. is one of the few major economies with whom India has a trade surplus. So, given the fact that U.S. has the largest trade deficit among all the major economies, in fact, all the economies have the largest trade deficit, and it is very keen to reduce its deficit and to find better access for its producers in these large markets. So, there is a certain degree of anxiety that U.S. has in terms of finding the Indian market. So, it has been pushing. So, I am looking at the good sector. Now, on India's part, India has been running trade deficits and the reason for us to be the situation is that our manufacturing and agricultural sectors are in a pretty dismal shape. And this was the reason why there was a pushback from the domestic constituencies when India is negotiating this mega-regional RCEP, the Regional Comprehensive Economic Partnership, because there is absolutely no appetite for any further liberalization. And this any further liberalization would mean death knell for all these Indian producers. So, you have a situation here that and again, if you look at the way government of India has been dealing with the great trade policy, it has been increasingly going protectionist. And this started about a couple of years back and if you look at this year's budget, this year's budget is all about trying to protect markets and trying to monitor imports as much as possible, because the government I think is mindful of the fact that exports are not growing and imports are sort of could go out of control. And therefore, the balance of trade will go so high that the current account will get jeopardized. So, the reason why this has not happened, this deal that you are saying that despite negotiations for several months, the two sides engaging for several months, there has been no movement is I think the fact that India is extremely careful and taking each step very carefully. And I don't think that we are going to go anywhere near doing even the minimal kind of a thing that the US is expecting. So, Dr. Dhar, if we can just get into the details of some of these areas where you said the contentious issues are quite deep and maybe start with agriculture, because that's been an issue where you already have letters from farmers movements, you have the AIKS has issued a letter, the Indian Coordination Committee of Farmers movements have. And Trump is, I mean, the USTR has already put out a list of products. And like you said, in an article that you wrote a few days ago, you've said that India's average tariffs have gone up over the last two years from 13 to 17 percent. So, what is it that India will do on agriculture and where do you see specific concerns in terms of all those products from almonds, walnuts, dairy, peanuts, soybean, wheat, all of these issues? Yeah, I think that's where things get absolutely, the real problem area is when you look at agriculture and that's where things become extremely difficult. Because US has been losing, has lost his edge in manufacturing. It's almost giving, China has taken over its manufacturing market. And therefore, the only strength that US has today, realistically speaking, is in agriculture. So, it's actually the largest exporter of wheat and soy or maize and all those products. And therefore, it is very keen to find this market. It's also linked to very high subsidies as you've written about. Exactly. So, I was going to come to that. And the reason is that the question one should actually ask is that how does US, which such a resource intensive agriculture, how is it able to maintain that kind of a stranglehold over the international market? And the reason is simple. We have been talking about for decades, the high doses of subsidies that are given to the, it's no longer small farmers, it's actually corporate agriculture which dominates the scene. So, that is what is happening. Now, on this issue, there's some interesting play going on between the, from side of US, I won't say between the two countries, but from the side of the US, which is that US is aware of the fact that if it pushes India to lowering tariffs on agriculture on all these major cereals, then there's going to be a flat no. And the way we negotiate it into the WTO, the World Trade Organization over the past two decades was very simple. India, when it came to reducing US asking India to reduce tariffs, India's straight response has been that if you guys reduce subsidies, then we can move our tariffs. Otherwise, it has to be a quid pro quo. So, it's very clear that with this kind of sort of negotiating counter, US would not get anything from India by way of additional market access. So, US has actually played a very interesting, you know, has, is playing out a very interesting card in the WTO, which is that it's questioning India's subsidies to the two major crops, wheat and rice. And as you know that India is basically a wheat rice economy, overwhelming large share of Indian, you know, the cultivable land is devoted to producing these two crops. So, which means that substantial number of farmers are engaged in production of these two crops. And then of course, it's very important for us because it's food security. And with the great deal of difficulty, we came to a situation where we can at least on paper call ourselves self-sufficient and we are self-reliant in agriculture. But of course, we need to do much more. So, now in the WTO, US has said that India is giving much more subsidies to wheat and rice than it is allowed under the rules. And so, their logic is very clear. They would like the WTO to come down heavily on India, as agricultural subsidies program, force India to reduce subsidies. And if subsidies are reduced, you know what's going to happen in the viability of Indian agriculture. And here we are talking about small and marginal agriculture. So, subsidies are used by both countries. One country uses subsidies to exploit markets, to penetrate international markets. The other country is using subsidies for food security. So, you know, these are at two very different levels. But WTO doesn't make this distinction. And we've been arguing that this distinction should actually be made. So, if the US is hoping that WTO does something to discipline India, and then it's going to be curtains for India, if WTO really comes down heavily. And is that the reason why there's been the removal of the GSP status, the generalized system of trade preferences? You also have a few days before India has been removed from the US's own definition of developing countries. There's been, like you said, in the WTO, an attempt by the US. I mean, at one level, they are trying to run down the WTO. But on certain elements, they are quite active. Removal of special and sort of differential treatment for countries like India. It's also an arena in the UNFCCC on climate talks where they want India and China and other big countries not to be recognized as developing countries. So, what is the sort of tactic that India will use to maintain its subsidies, but also its status? And that's something that I guess will be on the table because the sort of slapping of countervailing duties provision just came up a few days ago when it was removed. That is right. Again, the US, I won't even say a long term, but even sort of short to medium term strategy is to get the WTO recognize India as a developed country, not as a developing country. But unfortunately, WTO rules say that the countries actually self-designate themselves. And that's where the onus is on us to really spell out whether we are developing or a developed country. We have actually been calling ourselves a developing country. But the sentiments are very mixed here because a lot of people here would like India to be called a developed country. They won't actually want us to be with the poor, poor countries. They would like us to be a part of the richer block of countries. But this is strange. I don't know how people actually make that kind of an argument because if we look at India, a small part of India is actually a developing country, but a larger part of India actually looks like a least developed country. The kind of poverty we have, the kind of malnourishment we have and the development deficits that is all pervading and it's not decreasing, it's actually increasing. So I think Government of India will have to be very clear on this because the onus is on Government of India, whether or not to take the bait. So US has been doing all this, has been wanting to get India deregognized as a developing country. As you said, the first thing that they did was to remove India from the list of countries that enjoy trade preferences in the US. Simply put, developing countries get that advantage of lower tariffs for their products in the US. So therefore, they can enter more easily as compared to the developed countries and this has been going on from the 70s. So last year, US removed India from that list. This year, what they have done that there is an agreement in the WTO on subsidies and countervailing duties and this simply means that when some subsidies which are used by countries and these are part of exports and the subsidies are used to also export, the importing country can impose a countervailing duty, a matching duty which will neutralize the use of subsidies. Thanks a lot Dr. Dhar for taking us through, I mean the very complicated terrain of trade policy negotiations and getting into the details of specific issues. We'll come back to you post the visit if something else comes out of it. Thank you very much. Thank you for watching NewsClick and like I said, post the Trump visit, NewsClick will be sharing our analysis through our website and through the YouTube page. Thank you.