India should open up its market to attract more FDI: Wendy Cutler

Trade negotiations involve many detailed issues and often take over one year to negotiate, says Cutler

Wendy Cutler, former US trade diplomat, is vice-president, Asia Society Policy Institute, and managing director of its Washington D.C. office. Cutler, who served as acting deputy US trade representative (USTR) in the Barack Obama administration, in an interview with Asit Ranjan Mishra says though everyone is concerned about the pervasive uncertainty surrounding President Donald Trump’s economic agenda, it is for India to take a call whether to sign a trade deal with the United States (US) or not. Edited excerpts:

 

Though the 90-day pause on the issue of reciprocal tariffs is drawing to a close, not many countries are engaged with the US on a trade deal. What could be the reasons? Is legal uncertainty about presidential powers on such tariff hikes the only reason?

 

While many countries are negotiating with the US to avoid high tariffs, only one deal — with the United Kingdom — has been announced thus far.  This is not surprising. Trade negotiations involve detailed issues and often take over one year to finish. That said, some partners may be slow walking the talk now, awaiting more legal certainty from US courts. 

 

Now India is the only country seriously engaged with the US for a trade deal. Should India move ahead to conclude an early tranche of the proposed bilateral trade agreement or should it wait for a definitive judgment from the US judicial system on tariffs?

 

India, like other partners, is seeking a deal with the US by July 8 to avoid the reimposition of high reciprocal tariffs. But the India negotiations are a bit unique, having been launched before April 2, and with broader objectives. It’s encouraging to hear that substantial progress is being made in these talks.  

 

What does the US-UK trade deal tell us about the possible nature of a deal between India and the UK?

 

We can glean a few important takeaways from the UK deal. First, it appears that a 10 per cent US tariff is here to stay. Second, it shows that the US is open to discussing sectoral tariffs, including those in place like steel and autos, but also prospective tariffs perhaps resulting from ongoing Section 232 (part of US legislation empowering US Presidents to restrict imports) investigations, like pharmaceuticals. Third, it’s clear that the US is seeking non-MFN (most favoured nation) application of any tariff cuts. 

 

US President Donald Trump recently issued a diktat to Apple not to invest in India. The Big, Beautiful bill has proposed to tax remittance transfers by non-residents, which will adversely impact tax-paying Indians in America. Many in India believe with the ever shifting goal post by the US, India shouldn’t sign a trade deal with the Trump administration. Your views?

 

That decision is up to India. Clearly, partners, US businesses, and global investors are concerned about the pervasive uncertainty surrounding the President’s economic agenda. That said, given the size, dynamism, and continued growth in the US economy, partners continue to seek strengthened economic ties with the US.   

 

What are the ideal tradeoffs you would like to see in a trade deal between India and the US?

 

India has many more tariff and non-tariff barriers, which have led to frustration among its partners for decades. Now is an opportunity to open up its market, attract more foreign direct investment, and transform its economy into one of innovation and dynamism.  It’s also a chance for the Indian negotiators to seek more access and investment opportunities in the US.