India will 'wait' to sign the interim trade deal with the United States until the administration is 'ready' with the new global tariff architecture, a senior government official said on Monday.
This is because countries around the world are signing trade deals with the US based on their comparative advantage vis-à-vis competing nations.
"The India-US trade deal was supposed to be signed in March, but at that time the (US) supreme court judgment on IEEPA (International Emergency Economic Powers Act) tariffs had not come. Now, there's a 10 per cent tariff under Section122, which is related to the balance of payment crisis in place for five months…The US is trying to recreate the tariff architecture globally. Once they are on that path and are able to create that, that will be the right time to sign (the interim trade deal)," the official cited above said.
On February 20, the US supreme court revoked President Donald Trump’s authority to use the IEEPA to impose country-specific 'reciprocal' tariffs. Subsequently, from February 24, the US administration imposed a blanket 10 per cent surcharge on all countries for 150 days.
India and the US had announced a trade deal on February 2, followed by a joint statement on February 7. The 25 per cent additional ad-valorem tariffs imposed by the US on certain Indian exports, citing India's imports of Russian oil, were removed. Under the interim deal, the US had agreed to reduce tariffs on Indian goods to 18 per cent.
Currently, both sides are negotiating to iron out the final details related to non-tariff barriers and issues linked to the US tariffs under Section 232, which were finalised under the interim deal.
The official also said the government is examining the legal implications of the investigations launched by the US against India under Section 301(b).
"These investigations take time. Whenever the deal is signed, it will take care of these notices," the official said.
Last week, the Office of the United States Trade Representative initiated investigations against 60 countries, including India, to determine whether they failed to prevent imports of goods produced using 'forced' labour. It also launched tariff-related investigations against 16 trading partners, including India, accusing them of 'structural excess capacity and production in manufacturing sectors' that adversely affect America's reindustrialisation efforts.
Commerce Secretary Rajesh Agrawal said India remains engaged with the US for a mutually beneficial trade agreement.
"Pursuant to the US supreme court judgment invalidating reciprocal tariffs, the reciprocal tariffs are no longer in force. The US government has issued executive orders imposing 10 per cent tariffs pursuant to section 122 of the Trade Act 1974 on certain products from all countries," Agrawal said.
-- Shreya Nandi, Business Standard
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