US and India to Sign Long-Delayed Trade Deal, Trump Announces Progress on Tariffs and Russian Oil Dispute

Prime Minister Narendra Modi and President Donald Trump (File).

New Delhi:

The United States and India are set to finalize a long-delayed trade agreement, Donald Trump announced Wednesday while in South Korea during the final stage of his Asia tour.

The US President's statement suggests that a deal between two of the world's largest economies is imminent. Negotiations have extended over many months, complicated by disagreements regarding Russia's conflict in Ukraine, India's purchase of Russian oil, and disputes over tariffs.

"... if you look at India and Pakistan, so I'm doing a trade deal with India and have great respect and love for Prime Minister Narendra Modi... we have a great relationship," he stated.

Trump's encouraging comments follow recent reports of breakthroughs on two major obstacles – India's continued importation of discounted Russian oil and the US's 50 percent 'reciprocal' tariff on Indian imports, which included a 25 percent 'penalty' for purchasing that oil.

Discussions had previously stalled over India's unwillingness to grant the US access to its price-sensitive dairy and agricultural markets, which represent a crucial voter constituency for any Indian government.

Last week, reports indicated the US had agreed to reduce tariffs to 16 percent after India committed to decreasing purchases of Russian oil. This development occurred after Trump and Modi held a phone conversation, though neither party disclosed details or confirmed the trade-off between tariffs and oil.

The compromise may also involve increased imports of non-genetically modified American corn and soymeal – items central to this particular trade dispute between Washington and New Delhi – and include a mechanism for periodic review of tariffs and market access.

India has increasingly utilized corn to enhance ethanol production, but its regulations prohibit ethanol made from imported grains and ban genetically modified (GM) food crops. The US predominantly grows GM corn, though some farmers also produce non-GM varieties.

The US is urging India to permit corn imports, arguing that ethanol produced from American corn would solely be used for blending with petrol and not enter agricultural markets.

The focus on soybeans, meanwhile, results from the US-China tariff conflict, which has made American soybeans too expensive for the Chinese market. Consequently, the US wants to sell its soybean surplus to India as protein-rich feed for the country with the world's largest cattle population.

Throughout these extended negotiations, the Indian government has maintained a steadfast position that it will not accept any deal potentially harming the livelihoods of millions of small farmers.

Earlier this month, External Affairs Minister S Jaishankar stated that any agreement with the US must respect India's 'red flags,' referring to the "unfair" 25 percent 'penalty' for purchasing Russian oil.

'Nicest-looking guy': Trump praises PM, claims credit for ceasefire

Trump also reiterated his assertion about mediating the May 10 India-Pakistan ceasefire – claims New Delhi has consistently denied, insisting that Islamabad requested the pause – while praising Prime Minister Modi as "the nicest-looking guy."

As he has frequently done over the past five months, Trump claimed not only to have negotiated the ceasefire but to have prevented an India-Pakistan 'nuclear war' by refusing to sign trade agreements with either country.

"These are two nuclear nations... and they were really going at it. So, I called Prime Minister Modi and said, 'we can't make a trade deal with you... we can't. You're starting a war with Pakistan'."

"Prime Minister Modi is the nicest-looking guy (but) he is tough as hell. But after literally two days, they (India and Pak) called me up and said, 'we understand'. And they stopped fighting."

Trump has repeatedly sought recognition as the architect of the ceasefire, presenting his efforts to resolve this and seven other military conflicts as justification for receiving the Nobel Peace Prize, which was ultimately awarded to Venezuelan politician Maria Corina Machado.