india

Updated: Feb 26, 2020 05:44 IST

The proposed mini-trade deal between India and the US is set to be resurrected in a larger and more modern form. While more restrained than US President Donald Trump’s expectations of a “fantastic, biggest ever trade deal,” a number of Indian and US officials familiar with the development say the new agenda will be more forward-looking.

Talks may begin as early as April and will prioritise data and digital issues, the people said on condition of anonymity.

The original plan was to put together a small, quick deal for this week’s summit.

Prime Minister Narendra Modi was eager: his conversations with Trump have often run aground on trade issues. The US trade representative’s office went along because it was sold as crucial to the summit’s success.

But between America First and Make in India, even the mini-deal was going to be difficult. Both sides played switch and bait with the agenda.

The US kept adding more agricultural items with an eye to the US election.

US officials complain that the Indian side took electronics off the agenda.

New Delhi was taken aback when the US declared India ineligible for the generalised system of preferences, a market access agreement that they wanted to rejoin after being taken off it last year.

US trade representative Robert Lighthizer, say US officials, was unenthusiastic about a walnuts and chicken legs deal. While Trump saw these as important, Lighthizer saw the battles over e-commerce, data localisation and digital payments as the real trade issues.

These would determine the future of India-US economic relationship.

He pushed for a digital dialogue to be added, but was rebuffed by a New Delhi which felt its domestic data policies needed time to be sorted out.

The mini-trade deal died the instant Trump decided the giant crowd in Ahmedabad audience was sufficient reason to go to India. Although negotiators were in the final stages, deciding tonnages and tariff rates, Lighthizer spiked the deal. The US state department and lower level USTR officials tried to argue that the mini-deal would help curb the protectionist interests they feared were taking over Indian trade policy.

Lighthizer held firm: he would hold out for a 21st century deal.Signs in India’s budget undermining concessions made earlier on data localisation and New Delhi’s blocking US firms like MasterCard and Visa from its Unified Payments Interface only strengthened his view. The USTR also felt he only had bandwidth for one trade deal with India, given pending trade problems with China and a looming European Union battle.

Indian officials say having several months more time to work out the digital trade issues would not be a bad thing.

They also feel that following the Trump summit, Washington might put visa concerns on the table. Walnuts, chicken legs and Harley-Davidson motorcycles remain close to Trump’s heart. But with the summit done, the view on both sides is that the focus will now be on what really matters.