Indo-US Trade deal stuck on Dairy and Agriculture goods

It was in July that the Union Ministry of Commerce and Industry said that a trade deal with the US will be finalised with only a couple of phone calls to President Donald Trump. However, recent reports have suggested that it might not be that easy.

According to sources, The United States is pressuring India to lift restrictions on US export of dairy products and agriculture goods worth USD 6 billion. The tactic is not new as the US has tried to do the same with Canada and the USA as it tried to change the provisions of the North American Free Trade Agreement (NAFTA).

The problem is that the American dairy market has been overproducing for years but a drastic fall in the price of milk has made the business unsustainable for many farmers. The US is now looking to export the diary products to other countries but this move has been met with stiff resistance especially with its NAFTA partners Canada and Mexico which have allowed only partial access in their market. According to the statistics by the US Department of Agriculture almost 20000 dairy farms have closed in the past ten years and this has made the survival of small farms extremely difficult

India has always been a thorn for the Western countries because of the heavy subsidies that it provides to them. The subsidy is termed by the developed countries as “bad subsidy” as it hinders the large organisation to compete in the market. India had agreed to remove bad subsidies on fisheries as a start but the question remains on the definition of a bad subsidy.

The negotiations are bound to be difficult as the US elections are approaching and President Donald Trump would want to show results of his “America First Policy” which shows the desperation to conclude the deal as soon as possible.

The Indian side argument is that agriculture in India is not controlled by large organisations and most of its farmers will be hit by the measures if India opens up its agriculture sectors so the two phone call deal now looks a remote possibility and with both India and USA holding their ground a trade deal can be expected to take a long time.