US ready to reinstate preferred trade partner status: report

The US is ready to discuss awarding India preferential trade partner status, ambassador Eric Garcetti indicated in an interview with Mint on Thursday.

Such a partnership would boost bilateral trade to up to $500 billion by the end of this decade from $200 billion now, the report said, citing Garcetti.

Garcetti had earlier this month marked a year in office by releasing a peppy video on social media that, apart from highlighting the various aspects of bilateral ties, also put the spotlight on the burgeoning bilateral trade.

In 2019, the US had revoked the preferential trade status accorded to India during then US president Donald Trump’s regime.

Under the Generalized System of Preferences (GSP) to promote growth in developing countries, the US had offered duty-free entry for up to 4,800 products from 129 countries.

While ending the GSP status to India, Trump said New Delhi had not assured Washington that it would “provide equitable and reasonable access” to its markets.

In the interview, Garcetti told the paper that a bilateral free trade deal in unlikely but added that Washington is “open to discussing preferential trade agreements between our countries.”

The US is one of India’s biggest trade partners, with almost 18%, or $77.5 billion, of goods exported to the US in FY2024. The last fiscal reported a marginal decline in India’s exports to the US by 1% as overall exports tanked by 3%.

India imported goods and services worth $41 billion last year. The merchandise trade figures are skewed towards India, with the US being the only country among its top five trading partners.

Ajay Srivastav, former Indian trade service officer and founder of New Delhi-based think tank Global Trade Research Initiative (GTRI), told Press Insider that India is already negotiating an ambitious trade agreement with the USA and 12 other countries called the Indo-Pacific Economic Framework (IPEF) Agreement. Most of the negotiations are complete. He said, “Under IPEF, countries have negotiated multiple issues under four subjects: trade, Supply Chains, Clean Economy, and Fair Economy. India is negotiating all pillars except trade.”

He added, “On the US choice, tariff negotiations are not part of IPEF. Since the US has not agreed to include tariff negotiations in IPEF, it may not favour a seperatel FTA which deal with tariff concessions. India’s selective engagement in the IPEF allows it to maintain control over its tariff policies while benefiting from cooperation in other critical areas.”

IPEF members are Australia, Brunei, Fiji, India, Indonesia, Japan, Malaysia, New Zealand, Philippines, Singapore, South Korea, Thailand, USA and Vietnam.