U.S.-China trade war likely to dominate Narendra Modi-Donald Trump talks

U.S.-China trade war likely to dominate Narendra Modi-Donald Trump talks

The primary mission is to put trade talks between India and the U.S. back on track.

Prime Minister Narendra Modi and U.S. President Donald Trump will meet in Biarritz, France, on August 25, where India is a special invitee to the G7 summit. The meeting comes ahead of the one-on-one meeting between the two leaders on August 26, where trade issues are expected to overshadow proceedings.

While the impact of the growing U.S.-China trade war will be centrestage, New Delhi is also closely watching a special meeting at the G7 on how to reform the World Trade Organisation (WTO), where U.S. trade officials have indicated Mr. Trump could bring a proposal to stop India and China from availing special rights as developing countries.

Mr. Trump and Mr. Modi’s primary mission is to put trade talks between India and the U.S., that stalled in November 2018, back on track. Despite an agreement by the two leaders to restart the talks when they last met in June, top trade representatives of the two countries haven’t scheduled a meeting yet.

During a 30-minute telephone conversation with Mr. Trump on August 19, Mr. Modi had “expressed the hope” that Commerce Minister Piyush Goyal and U.S. Trade Representative Robert Lighthizer would “meet at an early date”.

While Mr. Goyal is expected to travel to Washington early next month, a Ministry official said that no date has been set as yet. A meeting of officials from the USTR office and the Ministries of Commerce and External Affairs last month, that sought to unpack some of the issues including increased tariffs, WTO disputes, new Indian legislation on e-commerce and data localisation, proved inconclusive.

According to trade lobby U.S. India Strategic Partnership Forum (USISPF) President Mukesh Aghi, the main reason for the prolonged delay in the trade representatives meeting is the growing U.S.-China tensions over trade.

“An India-U.S. trade resolution is a transactional one, involving a little bit of give and take, but the U.S.-China issues are transformational, which need major changes in laws and the way they do business. As a result, the U.S. is fully occupied with the developing situation with China at present, and unable to commit time to India,” he told The Hindu during a visit to Delhi.

The U.S.-China trade war escalated again over the weekend as President Trump announced a 5% hike in tariffs on over $500 billion worth of Chinese products after Beijing imposed new tariffs on $75 billion worth of U.S. goods.

Earlier in the week Mr. Trump said he was “the chosen one” to “take on China on trade”. In a series of tweets ahead of boarding a flight for the G7 summit on Saturday, Mr. Trump castigated China for “stealing” U.S. intellectual property worth “hundreds of billions of dollars a year”. Calling President Xi Jinping an “enemy” of the U.S., Mr. Trump suggested he would use “Emergency Economic powers” under a 1977 American law to deal with Beijing, and told U.S. companies to shut down China operations.

According to Mr. Aghi, India could be the beneficiary of the U.S.-China war, but only if it shows “flexibility” to resolve the trade dispute with Washington.

“U.S. companies in China are looking for alternatives. Why should they go to Vietnam or Cambodia or anywhere else and not see India as a future market? If India could see this as an opportunity, it would help with how it decides to take the trade talks forward,” Mr. Aghi said.

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