India is planning to include strong safeguard clauses in its proposed Bilateral Trade Agreement (BTA) with the US to prevent any violations, government sources have confirmed. This move comes amid concerns over the US’s past trade policy actions, such as imposing tariffs on Mexico and Canada despite trade agreements.
Background: US Tariff Violations in Previous Deals
- The Trump administration imposed tariffs on Mexico and Canada, as well as on steel and aluminum, in a manner seemingly violating trade agreements.
- The United States-Mexico-Canada Agreement (USMCA) replaced NAFTA on July 1, 2020, but the US still introduced unilateral tariff measures.
- Experts warn that the US has shown a tendency to renege on trade deals when convenient.
India’s Strategy for a Secure Trade Deal
Stronger Safeguard Clauses
- India plans to ensure legal recourse mechanisms in case of any breach of commitments by either party.
- The agreement will be structured to minimize the risk of unilateral actions by the US.
Balanced & Mutually Beneficial Terms
- The trade deal will not be one-sided, ensuring equal benefits for both countries.
- Officials acknowledge that in previous US trade deals, review and termination clauses have allowed policy reversals.
- India is carefully negotiating the contours of the agreement to prevent similar issues.
“Bilateral deals are international treaties. What shape it takes will depend on negotiations. We are now working on the roadmap for increasing bilateral trade with the US,” a second official stated.
Mission 500″: India-US Trade Target
India and the US have set an ambitious target of $500 billion in bilateral trade by 2030.
The first phase of the Bilateral Trade Agreement (BTA) is expected to be finalized by Fall 2025.
Both nations will focus on increasing trade in industrial goods, labor-intensive manufactured products, and agricultural goods.
Expert Concerns About the Trade Deal
- Ajay Srivastava, founder of Global Trade Research Initiative, has cautioned against rushing into a Free Trade Agreement (FTA) with the US.
- He pointed to past incidents where the US has failed to honor trade commitments.
- Despite these concerns, Indian officials believe that bilateral trade deals have built-in legal protections, making violations less likely.
Key Takeaways
India aims to protect itself from US trade violations by adding safeguard clauses.
The trade deal will be structured to be fair and mutually beneficial.
“Mission 500” aims to increase India-US trade to $500 billion by 2030.
India and the US will finalize the first phase of their Bilateral Trade Agreement by Fall 2025.
The agreement will focus on industrial goods, labor-intensive products, and agricultural trade.
