US Is Interested in a 'Grand' FTA With India, Lutnick Says
The United States is interested in negotiating a new free trade agreement with India, Commerce Secretary Howard Lutnick told an Indian audience on March 8.
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"The United States is interested in doing a macro, large-scale, broad-based trade agreement with India that takes everything into account, and that I think can be done. It will require a different kind of thinking, big thinking, things that your Prime Minister can do because your Prime Minister has a great relationship with President Trump," Lutnick said, calling in via video-call to the India Today Conclave, an event hosted by the Indian media organization.
He stressed that to make the deal, India would need to examine the "reciprocal" nature of its trade relationship with the U.S. and lower its current tariff rates on American products. "Let's bring India's tariff policy towards America down, and America will invite India to have really an extraordinary opportunity and relationship with us," Lutnick said.
When asked about the current state of negotiations between the two countries, he said that a piecemeal or multilateral approach would not be effective, but rather that "it's time to do something big, something grand, something that connects India and the United States together, but does it on a broad scale, not product by product, but rather the whole thing."
The key to negotiation for the potential FTA will be "to put everything on the table," Lutnick said, including opening India's agricultural market, a domestic political third-rail in India. "The Indian market for agriculture, it has to open up," he said. "It can't just stay closed. Now, how you do that and the scale by which you do that, maybe you do quotas. Maybe do limits. You can be smarter when you have your most important trading partner on the other side of the table. You can't just say, ... 'Oh, it's off the table.' That's just not an attractive way of doing business."
Lutnick rebuffed the idea that tariffs would put inflationary pressure on U.S. consumers, saying "there is no inflation from tariffs." Instead, he suggested that inflation could only come from budget deficits and printing money.
He also indicated that current tariffs on China, Canada and Mexico were aimed exclusively at preventing fentanyl, while the promised tariffs on April 2 will be about restoring American manufacturing. "When we get to April 2," he said. "we'll start talking about a broader range of tariffs, but for this period of time, it's about opioids, and it's about fentanyl, and it's about drugs killing Americans, which has gotta stop."
His remarks reaffirm Trump's aversion to multilateralism, and preference for bilateral deals with like-minded partners, like India's Narendra Modi: "I think if we do it bilaterally between India and the United States of America, and leave out the noise of all these other countries, I think what you will see is we will come up with a great trade relationship with India that I think will help both India and America grow and prosper."