US and Indian officials are meeting in New Delhi today for what promises to be a tetchy summit. The trade relationship between their countries has never been easy. The fact that India has a $22-billion trade surplus with the US — despite running a deficit with many of its other major trading partners — is particularly annoying to the Trump administration. The total might seem insignificant compared to America’s $566 billion trade deficit with China. For its own sake, though, India would be wise to address rather than try to minimize US complaints.
That’s not only because the US seems to be preparing heavy-duty retaliation. It might remove Indian exports from the “General System of Preferences” tariff plan, which ensures that about 2,000 different kinds of goods — “product lines,” as the trade negotiators call them — can be imported into the US without any tariffs being levied. Washington seems serious: In November, 50 Indian product lines were removed from the GSP.
Normally, Indian negotiators would point out that Indo-US trade isn’t particularly unbalanced, that we’re still a developing country and should get a few concessions, and that we’re all in this together against China, aren’t we?
That argument rings increasingly hollow, however. It isn’t just Trump’s fixation on Harley-Davidson motorcycles: He famously complained that Harleys imported into India were subject to a 50% tariff, even after Indian Prime Minister Narendra Modi called the US president personally to tell him tariffs were being cut. “They think they’re doing us a favor,” Trump fumed. “That’s not a favor.”
More genuine is concern about India’s growing protectionism. Indian tariffs on solar panels (ironically, meant to control Chinese imports) prompted a US complaint at the World Trade Organization. Then, an Indian attempt to fix the price of stents caused the US medical equipment industry to rise up in protest.
Now, India has chosen to wage battle against US companies on a completely new front: data localization. The Reserve Bank of India (RBI) told all payments companies to “store the entire data related to payments systems” solely in India. The government followed up with two separate draft policies, one of which ordered e-commerce companies to store user data in India and one which tells all internet companies to store personal data of Indians in India. The latter policy doesn’t even pretend to be anything other than an attempt to make it easier for Indian companies to do business at the expense of foreign ones. And, incidentally, it’s terrible news for any Indian who doesn’t want all her data made available to an unaccountable and intrusive national security bureaucracy.Read More