In an interview with CNBC-TV18, Sibal warned that a broad-based trade deal, as advocated by US Commerce Secretary Howard Lutnick, would not serve American interests as expected.
“If we don’t negotiate a product-based bilateral deal and instead opt for an across-the-board trade agreement, it will be China that gains the most, not the US,” Sibal warned. “And surely the United States doesn’t want that.”
Sibal’s remarks come amid intensified discussions between India and the US to lower tariffs and improve bilateral trade. President Donald Trump recently claimed that India had agreed to cut tariffs “way down,” reinforcing his long-standing assertion that US exports to India face excessive restrictions. However, Sibal dismissed Trump’s rhetoric, calling his statements exaggerated and misleading.
“Trump is bullying the rest of the world, including India, on this tariff question. He is totally changing the basis of international trade while rejecting WTO disciplines,” Sibal stated. He pointed out that despite Trump’s claims of a $100 billion trade deficit with India, the actual figure stands closer to $46 billion. Moreover, he refuted Trump’s assertion that the US “can’t export anything” to India, highlighting that American exports to India amount to approximately $46 billion annually.
Ahead of Prime Minister Narendra Modi’s visit to the US, India had already made significant tariff concessions on high-value American imports, including luxury cars and motorcycles. However, Sibal emphasised that any further tariff reductions should be tied to a reciprocal commitment from the US to increase imports from India. “If a target of $500 billion in bilateral trade is to be reached, it cannot be on the basis that America gains from this and India doesn’t. It has to be a two-way process,” he asserted.
Commerce Minister Piyush Goyal is currently leading India’s trade negotiations in Washington, D.C., engaging with US Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer. While discussions remain in the early stages, they are expected to shape the future of India-US trade relations significantly.
Below are the excerpts of the interview.
Q: How do you see the kind of frontal attack that Donald Trump has been making against India, saying that it’s impossible to sell anything here, and India, by the way, “has agreed to significantly bring down tariffs”. How do you read these statements? And also, to put in context, what Howard Lutnick actually had to say, he went on to say that we’re not looking at a product by product deal with India. We want something broad based. We want something at a macro level. We don’t care what you offer to the rest of the world, you need to have a special relationship with the US?
Sibal: Trump is bullying the rest of the world, including India, on this tariff question. After all, US is a huge market, and it imports, a few trillion dollars’ worth of imports from various countries.
Now, if this these exports to the United States, market is disrupted, which means that the countries that are exporting to the United States will be in a great fix. They’ll have to find alternative markets, and it will not be easy. So, Trump knows what he is doing. He is openly bullying, but he knows exactly what he is doing. He is totally changing the basis on which international trade has been taking so far. He is also totally rejecting the WTO disciplines. He wants bilateral agreements with countries on trade where he thinks he has the upper hand.
Of course, on India, he’s very vague on facts and figures, which is a pity, because, as you may recall, he said in one of his speeches that the trade deficit with India is $100 billion dollars, whereas in fact it is almost $46 billion. So, when he says that United States can’t export anything to India, this again is a back of the hand statement, which sort of means nothing, because, after all, their exports to India, are about $46 billion. So, you can’t say that United States can’t export anything to India.
With regard to Lutnick, they are making a big mistake, and we have to persuade them why they are making this mistake. We can have a bilateral agreement with them, and this is allowed under the WTO. And this will then exclude MFN treatment, because if we don’t do a product based bilateral negotiation for United States, and go ahead with across the board, then basically it’s not United States that’s going to benefit most from it, it will be China. And surely the United States doesn’t want that. Therefore, the whole approach is wrong, and it is actually to get his way, one way or the other.
The other thing is his tendency to make a running commentary where negotiations are taking place behind the scenes. Now it is a fact that India and the commerce minister has gone there with a very positive mind, instead of being negative about tariff reductions as we’ve been in the past, the entire attitude today is different. A lot of study has been done by India before this meeting has taken place as to where we can actually go in for tariff reduction, which will satisfy the Americans and what we can therefore extract in exchange from the Americans.
Q: We’ve seen from the time of the Union Budget that India had been making concession. We reduced tariffs on fully built cars above $40,000 from about 100% to 70%. Even on Harley Davidson or high capacity motorcycles over 1600 CC, and even less than 1600 CC, we have reduced tariffs in the budget and also for certain electronic items. So, we’ve been making those gestures for the US. The US knows this, but they definitely want more. I’d like to draw your attention to what some highly placed sources told us on Saturday, that it is very difficult to reveal what’s happening in negotiations. We are putting our sensitivities forward, but the current negotiations must be seen in the light of how India reduced the average applied tariffs for countries like Norway, UAE and Australia. Does this give you an indication that yes, India will reduce the average applied tariffs across the board with the US, and probably bring it somewhere to the same level?
Sibal: We have had these FTAs with Australia and with EFTA and with the UAE. So, what this high-level source is simply saying is that we have gone down that road with the countries with which we have signed an FTA and so if we sign a multi-sector trade agreement with the United States, we’ll go down that road with the United States too. We have already demonstrated our willingness to do that.
And with regard to the concessions made in the budget, that was a kind of a softening posture, that even before the Prime Minister visits the United States, it was a message to Trump that we are willing to make concessions to the United States on tariffs, and this was not reciprocal. We didn’t ask for anything in return. It was simply a show of goodwill and our intentions hoping that would be registered and parsed, because in the joint statement, you will find a reference to the steps that we took in the budget to open up more trade opportunities for select American goods.
But Lutnick is quite wrong when he wants India to make these concessions across the board, unless this is negotiated very, very seriously and deeply between the two sides, where there is some reciprocity, where we have shown our willingness that we can open our economy to more imports from the United States, as against which we will expect that we can export more to the United States. If a target of $500 billion has to be reached, it can’t be on the basis that America gains from this and India doesn’t. It has to be a two-way process.
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