India’s former top negotiator at WTO. Now he warns of risks in a full fledged FTA with US

“My view is that it is not in our interest to do an FTA with America that includes agriculture and gold-standard rules. A limited trade deal with America can be helpful, but a full-fledged FTA, which the US is demanding, may not be good for us – both for industry and agriculture, and for areas such as pharma, dairy, and poultry,” the former secretary said.

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Deepak served as India’s Chief Negotiator for the WTO, RCEP, and EU trade agreements from June 2017 to May 2020. Before that, he served as Additional Secretary in the Department of Commerce from September 2012 to August 2015.

The former secretary said agriculture would be among the most sensitive areas in negotiations with Washington. He said India is equipped to do FTAs with everyone else in the world except two countries: China and the US.

“China is the factory of the world. Imports from China, without tariff protection, can swamp and disrupt our industry in many sectors. The US, meanwhile, is a demander of gold-standard FTAs, which have very problematic rules in some areas.”

The former top negotiator said that the US demands market access for agriculture, “which is a problem of one kind.” Washington, he added, wants reductions in tariffs for soy, corn, dairy, poultry, and so on, which can affect livelihoods.

“We have a huge poultry industry in Andhra Pradesh, Karnataka, Telangana, and other states. The US has three or four years’ worth of chicken drumsticks stored in cold storage, which it considers waste, for dumping into countries like India at very low cost. If we remove tariffs on poultry and non-tariff barriers as part of an FTA, our poultry industry could be at risk of being swamped by cheap poultry imports from the US,” the former secretary warned. “The same is the case with dairy.”

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Agriculture is where the risks of a US trade deal are most acute, he warned, adding that cheaper American imports could put millions of small Indian farmers under pressure, especially if US farm subsidies remain in place.

“Agriculture is very sensitive. Ninety-nine percent of our farmers are low-income, resource-poor, small farmers by international standards, with less than 12.5 hectares of irrigated land. If we allow free imports from the US, they are likely to be swamped, and their livelihoods will be at risk,” he said.

The former secretary pointed out that the developed countries provide subsidies that are almost limitless for agricultural products. “If they continue to provide subsidies, and we reduce our tariffs under negotiation or condition, our farmers are likely to face a dire situation.”

Cotton, he said, illustrates the stakes. “If we allow US cotton to come to India duty-free, our cotton farmers are going to be destitute. These are very sensitive areas, and that is why I have mentioned that India is ready for an FTA with any country except China and the US,” he said.

Pharma, Digital Trade Risks

But agriculture is not the only area where Deepak sees trouble. He also warned that the bigger risks could lie in the rules the US wants India to accept on intellectual property and digital trade. Pharmaceuticals, he said, are a case in point.

“A bigger issue is the gold-standard rules the US demands in areas such as intellectual property rights and digital trade,” he said. “Our pharma industry depends on generics. We are not great inventors. Very few molecules, if any, have been invented by Indian companies. When multinational companies develop a drug, and the patents expire, we make similar drugs and sell them at a fraction of the cost. We export these drugs to almost 150 to 160 countries and have had major successes.”

He pointed to Cipla’s role in making antiretroviral treatment affordable in Africa as an example of what India’s generic drug industry has achieved. “But in an FTA with the US, they would like to introduce things like the evergreening of patents, or take away our right to prevent evergreening. That means they try to expand patent life through small innovations, which closes the door for generic formulations. This is a problem,” the former secretary cautioned.

The former top negotiator also sees a clash over data. India’s data localisation policy, he said, allows the country to process its own data and use it for domestic economic development. US demands on digital trade could limit that policy space.

“We benefit from data localisation. We would like India’s data to be used for India’s development, through processing here and converting it into intelligence, rather than being transferred to other countries, where it is processed and converted into intelligence and sold to advertisers and others. So there is a difference of opinion. If we do an FTA with the US, some of the policy options we have in these areas are likely to become restricted.”

Limited Deal Better Than Full FTA

India and the US are currently negotiating a trade deal.

Deepak said India could benefit from an agreement with Washington, but not necessarily from the kind of comprehensive FTA the US is seeking.

Asked whether he was hopeful that India and the US would eventually conclude an FTA, he said: “My view is that it is not in our interest to do an FTA with America that includes agriculture and gold-standard rules.”

The former bureaucrat said a limited trade deal with America can be helpful, but a full-fledged FTA, “which the US is demanding, may not be good for us – both for industry and agriculture, and for areas such as pharma, dairy, and poultry.”