The US-India trade war may be cooling down, at least on the surface. The two countries, the largest bilateral trading partners in the world, have announced that they will resolve six WTO disputes and unwind retaliatory tariff hikes imposed against each other over steel and aluminum. The announcement comes ahead of a meeting between Prime Minister Narendra Modi and US Vice President Joe Biden at the G-20 summit in September.
It also follows months of nudging by New Delhi for Washington to exempt India from the increased duties on steel and aluminum. In its most recent submission to the WTO, the Indian government said it would withdraw the retaliatory customs duties if Washington dropped the Section 232 measures that led to the higher import duties in the first place.
While the move is a welcome development, it shouldn’t be seen as a permanent solution to the tension between the US and India over imposing Section 232 duties. The two countries still have many trade disputes and disagreements over intellectual property rights, which have sparked a growing distrust.
The US and India must resolve these issues to establish a more stable economic partnership. The United States is a crucial partner in India’s efforts to compete with China in global markets and must be a strong partner on trade and other policy issues. The Biden administration should take steps to set the stage for a stronger partnership, starting by reinstating India as a beneficiary of the Generalized System of Preferences (GSP) program.
The GSP is a US trade preference program that waives specific import duties for developing countries. It is the primary mechanism by which the United States provides foreign aid. India received over $1 billion in assistance from the GSP last year alone. Reinstatement of the program would help both sides boost exports and expand access to global markets. It would also make it easier for India to compete for US government procurement contracts.
