What is Clause 8 in India-US Trade Deal that will give big advantage to India over US?
The US had greater advantages in the previous deal.
India is now in a position to leverage Clause 8 to renegotiate the deal.
New Delhi: After much effort, the trade deal between India and the US was tentatively approved, but before the deal was even finalized, a new twist has emerged. The US Supreme Court recently struck down Trump's tariffs, and now discussions have begun on re-implementing the deal with India. India had added a clause to the previous deal, which could now be used to secure a new deal. The US court has given India the weapon it can use to reverse the deal in its favour.
Clause 8
Clause 8 was recently included during the negotiations for the India-US trade deal. India had included this clause because a case was pending in the US court regarding Trump's tariffs. Therefore, India added Clause 8 to the deal to protect itself. Now that the US court has declared Trump's tariffs illegal, this clause has become useful. India is now in a position to leverage Clause 8 to renegotiate the deal. This Clause 8 now gives India a more advantageous position in the deal.
What is Clause 8?
The India-US trade deal was interim, which meant it was open to further changes. This is why India added Clause 8. Clause 8 states, "If there is any change in the tariffs of any country, the other country may change all its commitments." India added this clause in view of the ongoing litigation over the tariffs. Now that the US Supreme Court has struck down the tariffs, India can leverage this clause to impose new conditions on the trade deal.
How will India benefit?
The US court declared Trump's tariffs illegal under the IEEPA, after which Trump imposed a 15% tariff on India instead of the 18% tariff. This means that the tariffs have already been changed before the deal is finalized. Therefore, India can invoke Clause 8 to reimpose tariffs on US goods or change the terms, such as purchasing US$500 billion worth of US goods. However, if India becomes more stringent, the entire deal could be stalled. Currently, the deal is ongoing from both sides.
The US enjoyed advantages in previous deal
The US had greater advantages in the previous deal, as its goods gained easier entry into the Indian market and tariffs on US industrial goods in India were zero or significantly reduced. Tariffs on agricultural products such as sorghum, tree nuts, fruit, soybean oil, wine, spirits, etc. were low. India was under pressure to purchase energy, aircraft, precious metals, tech products, coking coal, etc. from the US over the next five years, which would have boosted American exports and jobs.
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