Far from the din of elections, Indian officials are working closely with U.S. officials to ensure that two upcoming deadlines in early May, for the extension of the Iran oil sanctions waiver, as well as the final decision on withdrawing India’s preferential Generalised System of Preferences (GSP) status, end positively for the government, multiple sources in Delhi and Washington confirmed.
While the decision on the GSP could be deferred until after elections, the discussions on the Iran oil sanctions waiver have indicated an extension is likely, with India allowed a lower quantity of oil imports from Iran.
Last week, following discussions with U.S. Under Secretary for Terrorism and Financial Intelligence Sigal Mandelkar, who visited Delhi in early April to discuss “U.S. nuclear-related sanctions on Iran and the global coalition to combat Iran’s state support for terrorism and ongoing malign behaviour, ” the Ministry of External Affairs (MEA) had said both sides had been “continuously engaged” on the issue of India’s oil imports from Iran since November.
India, Turkey and China remain the only countries with significant imports. After initial defiance where it said it only recognised “UN sanctions, not unilateral sanctions”, the Modi government has softened its stand in negotiations for the sanctions waiver from America.
According to informed sources, the U.S. is considering an extension of the six-month waiver, but reducing the quantity of oil India can import from the previous allowance of nine million barrels a month. “The waiver lapses on May 4; let’s wait and see what happens. But I think the important thing is that we will continue our engagement to see if we are taking care of our energy security; but the important thing is that the discussions and the engagement should continue and which is continuing between India and U.S.,” said MEA spokesperson Raveesh Kumar.
The deadline, for the announcement of the cancellation of U.S. preferential duties or GSP status, set for May 2, may be put off if the U.S. Trade Representative in Washington Mark Lightizer accepts an appeal from India-Causus co-chairs senators Mark Warner and John Cornyn, who wrote to him on April 12, as well as one from Republican Congressman George Holding who wrote to him on March 27.
In the letter, the senators asked that the U.S.TR should “consider delaying the issuance of a Presidential proclamation to withdraw India’s GSP benefits by at least 30 days, beyond the 60 day calendar, in order to move the negotiations beyond India’s elections…to provide a real opportunity to resolve these market access issues, potentially improving the overall U.S.-India relationship or years to come. ”
Despite the appeals, U.S. officials say there has been a growing sense of frustration in their administration on trade issues.
“While we were pleased that growing U.S. exports to India, largely crude oil and LNG, led to a 7.1% reduction in our bilateral goods trade deficit last year, many structural challenges in our trade relationship have yet to be resolved. Trade has frankly been an area of frustration in the relationship, but the door is open if India is prepared to bring a serious proposal to the table,” a Senior State Department official told The Hindu last month.
According to the officials, out of the nine outstanding issues on trade, the two sides were able to narrow differences on all but two or three, which were irreconcilable, and led to the U.S. notice on cancelling GSP.
These include the issue of certifying dairy products from “vegetarian” cows, and the price caps on medical devices like stents — both of which had originally triggered the GSP review in April 2018.
Case in WTO
The U.S. also remains concerned about duties and regulations in the Information Technology industry, — an issue for which the European Union has filed a case against India at the World Trade Organisation (WTO) this week.
In addition, officials said the U.S. is watching India’s decision on 5G technology closely, particularly the fate of the bid by Chinese company Huawei, given the U.S.’s cases against it.