00:00And let me bring in Michael Kugelman, Director, South Asia Institute, the Wilson Center.
00:05And also joining us on the show is Ajay Shivasta, Founder, Global Trade Research Initiative.
00:11Michael, let me begin with you. You know, this has been waiting for pretty long.
00:16There has been some tough negotiation by India.
00:20But finally, it seems like that it is the last mile hitch that is what is being indicated by Marco
00:31Rubio.
00:33Yeah, thanks. And just to clarify, I'm not with the Atlantic Council.
00:37You know, we've heard many times over the last few months that the two sides are close to a deal.
00:42And, you know, we're hearing that again now.
00:45And if you have a glass half empty approach, you could say, well, if we've been hearing so many times
00:50that a deal is close, but the deal isn't actually finalized, there must be a problem.
00:54But it does seem that things are different now.
00:56And I think that one thing that is new is that the Trump administration recently announced that it's going to
01:02hold off implementing the new Russia sanctions bill,
01:05which could have potentially targeted India with new punitive measures.
01:11And I think that that has perhaps opened up some space for the U.S. and Indian sides to do
01:17what they need to do to negotiate to the finish line.
01:21And I like to think there's a good chance that by the end of the year, there will indeed be
01:26a deal.
01:27Well, Mike, stay with us.
01:29Dr. Ajay Srivastava also joins me, founder of Global Trade Research Initiative.
01:35Ajay Srivastava, the fact is that, you know, Michael is talking about all these issues
01:40that still are niggling areas when it comes to the trade deal.
01:46How hopeful are you that there could be a trade deal sooner than later?
01:50Because the niggling issues are not small issues that can be ironed out anytime soon.
01:57We are talking about farmer security.
01:59We are talking about agriculture and dairy.
02:01And that continues to be a major concern.
02:04I think today, even though everyone is talking that deal is near, I think one major lacuna is there, one
02:11major gap is there.
02:12What tariff U.S. is going to offer to India?
02:15You know, we are negotiating this deal under the framework we signed as India-U.S. joint is checkmate on
02:21February 6.
02:22Therein, U.S. promised to cut its tariff, reciprocal tariffs from 25% to 18%, but just two weeks after
02:30that, U.S. Supreme Court held those reciprocal tariffs as invalid.
02:35It means Trump did not have power to impose them in the first place.
02:38Since then, nobody knows.
02:40U.S. does not know.
02:41India does not know that what tariff now U.S. is going to offer.
02:46I'll give you an example.
02:47For example, I'm exporting shirts to U.S.
02:49So today I'm paying 22% tariffs on this 12% normal regular tariff.
02:54We call it MFN tariff and 10% U.S. imposed on 60 economies, including India forced labor tariff.
03:01So 22%.
03:02So U.S. has to clarify if we do a deal, whether it is 22% will come down to
03:0820, 15, 10, 0,
03:10or it will remain the same.
03:12Today, the countries with which U.S. has signed the trade agreement, including Japan, South Korea, and many others, the
03:19tariff remains the same.
03:21So countries will sign the trade deal and countries will not sign.
03:24They are paying the same tariff.
03:26So that's untenable position.
03:27U.S. has not clarified this.
03:29One more thing U.S. has not clarified certainty from future tariffs.
03:33For example, U.S. did sign an agreement with, say, European Union, Japan, Korea,
03:38but even after signing it has imposed new tariffs under Section 301.
03:42So we want certainty if we are going to concede so many things.
03:46We want certainty that, okay, this is enough, this level, no more in the near future.
03:51So those two things are missing right now from the U.S. narrative.
03:54But, Mario, that's what exactly Marco Rubio said in this interview, Ajay.
03:59He did say that if a trade deal is signed, that will bring certainty to the room.
04:05Do you believe that, Michael, that a trade deal would bring certainty to this relationship
04:10under Trump administration or with the Trump administration?
04:15I think that Rubio's reference was in the context of investors and traders.
04:21No, I mean, I do think that if there's a trade deal, that'll be a big boost for the relationship.
04:25It would be a confidence-building measure.
04:27But there's clearly a lot of work to do still, or there would still be a lot of work to
04:31do
04:32to get the relationship back on track, broadly speaking, if there's a trade deal,
04:36just because there are a number of issues that are not tied to trade and investment
04:42that have generated tensions in this relationship, as you well know,
04:45whether we're talking about the Trump administration's very deep embrace of Pakistan's army chief,
04:52or whether we're talking about the perception that this administration views their relationship
04:57with India through a transactional lens and not through the lens of the strategic partnership
05:02that would really define the relationship for the last decade plus.
05:07But I think that for investors and traders and others that would be directly impacted
05:13by the trade deal, obviously, it would be a good thing just because there'd be certain things set in stone.
05:18But let's be clear that even if there's a trade deal, that doesn't mean that there's not going to be
05:22future tensions over, you know, whatever type of commercial issue might come into play.
05:28But my view, the reason why I think that a trade deal would be so important
05:33is that it could really make it easier for the two sides to work through the other issues,
05:40the other problems in the relationship, just because I think it would be a confidence-building measure,
05:45would be a good thing that both sides would feel happy about.
05:47We want to now increase and move forward.
05:51We keep Michael Kugelman with us.
05:55He continues to join us and stay with us.
