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Attempts to seal a US-India trade agreement by the August 1 deadline seem to be stalling, even after months of top-level talks and President Donald Trump’s frequent assertions that an agreement was “coming soon.
The talks have reached serious impasses, one insider said, “a total mess.” US Trade Representative Jameison Greer and Trump are insisting on broader market access to Indian markets for American farm exports fresh fruits and vegetables, dairy, and poultry but Indian officials have pushed back on such demands out of concern for their own farmers.
Rick Rossow of the Center for Strategic and International Studies said that while negotiations started off fast, the last leg has been the toughest. “Those last stages are always the most challenging,” he said.
Indian State Minister of External Affairs Kirti Vardhan Singh recently informed Parliament that there are ongoing negotiations that are “active,” aimed at lowering tariffs, eliminating non-tariff barriers, and enhancing supply chain integration. A White House spokesperson said that talks continue, calling them “productive.
However, India’s chief negotiator, Rajesh Agarwal, concluded a fifth round of discussions in Washington last week without breaking the impasse. There is no meeting scheduled until mid-August, falling behind the originally intended schedule.
A key sticking point is India’s reluctance to open up its agricultural market. With nearly 42% of its population dependent on farming, and general elections looming, Modi’s government is wary of upsetting a vital political base. Cultural sensitivities also play a role India’s dairy import standards require milk to come from cows not fed animal-based products, aligning with Hindu religious beliefs.
India has also stood firm on prohibiting imports of genetically altered soybeans and chicken for health and environmental reasons. India, as the fifth-largest producer of soybeans in the world, has little to gain from easing these bans.
US farmers, particularly in Iowa and other states, which sent a group of their number to India last year, have been making representations for greater access. Tariffs on US soybeans are as high as 56%, and poultry duties approach 100%.
Farwa Aamer of the Asia Society explained India is expecting competitive tariff rates, perhaps comparable to those offered to Japan, which had negotiated reduced US tariffs.
Though strategically close on a rising Indo-Pacific axis, their priorities for trade remain sharply at variance. The full agreement is now likely no sooner than October, perhaps coinciding with Trump’s trip to India for the Quad summit.
Even as diplomatic relations warm up, the future of the trade agreement now depends on whether economic interests and political realities on either side can be brought into line.
