india

Updated: Jun 29, 2019 00:00 IST

Prime Minister Narendra Modi and US President Donald Trump decided on Friday that trade ministers of India and the US will meet soon to resolve differences on trade-related matters, which have sharpened in recent weeks despite growing convergence on strategic issues.

A day after Trump tweeted that India must withdraw retaliatory tariff hikes on US products that he described as “unacceptable,” the two leaders met on the margins of the Group of 20 (G20) Summit in the Japanese city of Osaka and held talks that focussed on trade, 5G telecom services, Iran-US tensions and defence ties.

Both leaders “aired their concerns” and agreed their trade ministers “would meet at an early date and would try and sort out these issues”, foreign secretary Vijay Gokhale told a news briefing after the meeting.

A White House official was quoted by Reuters as saying that Modi and Trump had called on their teams to work on mutually beneficial trade solutions. The official wasn’t identified.

The remarks indicated the two sides are willing to work on controlling the feud that appeared to be escalating after India imposed tariffs on 29 American products in retaliation for Washington withdrawing export benefits under the Generalised System of Preferences (GSP) on June 5. The end of that preferential treatment affects around $5.6 billion worth of Indian exports to US, although the actual impact in terms of tariffs is expected to be around $200 million.

People familiar with the discussions between the two leaders said the meeting – the first since Modi’s re-election in May – had gone better than expected and that Trump used the word “positive” several times in his remarks. Modi stood his ground and made it clear both sides should put their cards on the table and find a solution to the trade issues, the people said.

There had been apprehension that Trump’s demand for the withdrawal of Indian tariff hikes could undo progress made in talks between US secretary of state Mike Pompeo and the top Indian leadership in New Delhi on Wednesday, but one of the people cited above said the reference to “tariffs didn’t necessarily mean the US doesn’t want to be friends”.

“The Indian side presented the big picture and pointed to the growing convergence of interests, and the US side was receptive to the suggestion that these differences should be handled by ministers and officials,” the person said, requesting anonymity.

The people familiar with the discussions said the new commerce minister, Piyush Goyal, and the minister of state, Hardeep Puri, a seasoned negotiator, could handle the trade issues.

According to Gokhale, Modi referred to his “very good discussion” with Pompeo and said India “had taken some action after the GSP was revoked, (and) that was now something that already had happened and now we should now look forward and we should see how we can resolve some of these issues”.

Both sides will decide whether the meeting between the trade ministers should be preceded by discussions among officials on technical matters. “Essentially, it was a very productive discussion...and we will take things forward,” Gokhale said.

The main sticking points in trade, apart from tariffs, are access to Indian markets for US dairy products and medical devices.

Referring to US-Iran tensions, Modi outlined India’s concerns over energy and peace and stability in the Middle East. Modi pointed out that Iran had accounted for 11% of India’s energy needs and New Delhi reduced oil imports from Tehran despite the effect it had on the economy.

“We (have) our diaspora in the region, we have energy requirements of the region, we have economic interests in the region and therefore it is in India’s fundamental interest to ensure peace and stability of the region,” Gokhale said.

Trump appreciated India’s decision to deploy warships to protect Indian-flagged vessels passing through the Persian Gulf and Strait of Hormuz. He mentioned what the US is doing to maintain stability in the Gulf and keep oil prices stable.

The people familiar with the discussions said Modi indicated to the US side that all players should “dial things down” as tensions in the Persian Gulf would affect sea lanes of communication, energy supplies across Asia and more than eight million Indian expatriates working in the Middle East.

Gokhale said the two sides also discussed the technical and business opportunities presented by 5G services and the possibility of cooperation by leveraging the Indian market and its capabilities in design, technology and software development.

“The way India moves or...whatever choices India makes will essentially determine the way the global trend will go. Therefore, the Prime Minister said it is important that we collaborate,” Gokhale said. Trump welcomed this idea and both sides agreed to hold meetings at the technical level and the level of foreign ministers, he added.

The US has been pressing its allies to shun Chinese telecoms equipment maker Huawei Technologies in 5G networks on security grounds, a move that has angered Beijing, which feels the firm is being shut out of Indian trials.

A tweet from the White House said Trump and Modi also shared ideas to reduce the US trade deficit, and safeguard peace and stability throughout the Indian Ocean and Pacific region. The people familiar with the discussions also said differences over India’s $5.2 billion deal with Russia for the S-400 missile defence systems didn’t come up during the talks and Trump’s focus was primarily on trade issues that had built up since last year.

Before his talks with Trump, Modi participated in the second meeting of the Japan-America-India (JAI) trilateral with the US president and Prime Minister Shinzo Abe. The short meeting discussed the Indo-Pacific and how the three sides can work together on connectivity, infrastructure, ensuring peace and security and building on this new concept for the benefit of the region.

Later in the day, Modi joined a meeting of the Russia-India-China (RIC) trilateral with President Vladimir Putin and President Xi Jinping that focussed on the international situation, challenges to the economy and stability, and strengthening the global system led by the United Nations.

The three leaders agreed it was important to maintain globalisation, liberalisation of trade and a free and open trading system, while safeguarding global and regional peace through multilateral solutions.

Neelam Deo, a former ambassador and director of Gateway House, a Mumbai-based foreign policy think tank, said dealing with the US involved unequal power equations and it was necessary to properly interpret Trump’s tweets.

“He can be harsh in the way he phrases his tweets but the actual interaction is what matters,” she said. “A good opening has been made and as secretary of state Pompeo said, these are technical matters and should be dealt with in that manner.”