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Business Standard
17 hours ago
- Business
- Business Standard
Before Trump, there was Bush Sr: How India dodged US tariffs in 1990s
As stormily as US President Donald Trump has revived tariffs in 2025 through his 'reciprocal' duties, sparking global concerns, trade tensions between India and the United States are not new. However, India has navigated this terrain before. An earlier flashpoint came over three decades ago under George HW Bush, when Washington threatened sanctions that raised alarms in New Delhi. At that time, the US was frustrated with India's closed economy, high tariffs, import bans on consumer goods, and weak intellectual property (IP) rules. Bush Sr's officials invoked legal provisions under the Omnibus Trade and Competitiveness Act of 1988, which had created 'Super 301' and strengthened 'Special 301' powers for the US Trade Representative (USTR). What followed was a tense back-and-forth, targeted suspensions of trade benefits from the US side, cautious liberalisation and bargaining from India in 1991 that helped the two sides avoid an all-out tariff war. What triggered US tariff threats against India? In 1989, under Super 301, USTR opened probes into India's restrictive trade regime. By June 1990, India's insurance policies were ruled 'unreasonable' and burdensome to US commerce. Retaliation was deferred as services and investment issues were negotiated in the Uruguay Round of the General Agreement on Tariffs and Trade (GATT). The sharper escalation came in April 1991 under Special 301. USTR designated India as a "priority foreign country", the toughest category, citing lack of product patents for pharmaceuticals and agricultural chemicals. After a nine-month probe, USTR concluded in February 1992 that India's IP regime was 'unreasonable' and restricted US commerce. In April 1992, Bush suspended duty-free Generalised System of Preferences (GSP) benefits on $60 million worth of Indian exports, mainly pharma and chemicals. This was later widened to about $80 million. It marked the most concrete US step against India, but remained targeted rather than sweeping tariffs across the board. How did India respond to the US actions? India responded with a mix of domestic reform and sector-specific deals. In mid-1991, facing a balance-of-payments crisis, then prime minister PV Narasimha Rao and finance minister Manmohan Singh began liberalising the economy, resulting in cutting some tariffs, easing licensing and signalling a more transparent regime. The July 1991 reforms eliminated import licensing for most capital goods and raw materials, opening the economy to foreign inputs. These reforms were key to satisfying demands from the US and the broader international community, and allowed India to sidestep severe US retaliation through a combination of structural change, engagement, and international legal recourse. In parallel, India engaged in negotiations on IP and film imports. New Delhi made commitments in February 1992 to ease film import restrictions whose implementation started in August 1992. While product patents for medicines were not adopted then, copyright laws were strengthened by 1994–95, leading to India being downgraded from "priority foreign country" to the "priority watch list" by the USTR. Did the US ultimately impose broad tariffs on India? The Bush administration stopped short of sweeping tariffs. Broader retaliation flagged in 1990 did not proceed, and the dispute shifted into multilateral tracks, including the Uruguay Round and eventual WTO-linked TRIPS negotiations. This combination of selective concessions, structural reforms, and global negotiations lowered tensions and allowed India to sidestep wider sanctions. Implications for India and lessons for today For India, the episode underscored that market-access barriers and weak IP rules could carry real costs even short of tariffs. The 1992 GSP suspension hit sensitive sectors and signalled to investors that rules would tighten over time. It also intersected with domestic reform needs, nudging steps toward transparency, sectoral openings and eventual TRIPS-related commitments later in the 1990s. Now Trump's 'reciprocal tariff' regime marks a far more expansive use of tariffs as a first-line tool, framed as addressing deficits and reciprocity. Amid market turbulence and negotiations, the White House has repeatedly modified the schedule and, as of August 11, extended a truce with China for 90 days. By contrast, the Bush Sr era relied on targeted programme suspensions (like GSP) and case-by-case pressure to secure reforms, while keeping larger tariff escalation in reserve. The 1990-92 playbook suggests New Delhi can limit damage by addressing pinpoint grievances, keeping channels open and avoiding confrontational escalation that invites blanket tariffs. Back then, selective concessions and broader reforms helped India dodge wider sanctions. With global conditions more volatile today and US tools sharper, the margin for error is thinner.
New Indian Express
6 days ago
- Business
- New Indian Express
Unfurl sturdy sails to navigate trade doldrums
Donald Trump's tantrums, which began during his first term as US president, seem to have peaked in his second term. During his first term, Trump initiated the virtual destruction of the World Trade Organization (WTO), an organisation established to ensure orderliness in global trade and facilitate gradual movement towards free trade taking into account the diverse development stages of the members. He achieved this by blocking the appointment of appellate body members, thereby preventing the powerful dispute settlement mechanism from functioning and enabling aggrieved members from imposing retaliatory tariffs on the aggressor. This brings me back to my days as India's ambassador to the WTO. We were under constant pressure to reduce our tariffs. We received lectures about the benefits of free trade from the US, the EU, and several other allies within their camp and from the director general of the WTO. We had defensive interests in agriculture— there was no way we could let our farmers down. The EU also had defensive interests, and we initially aligned with them. The EU and the US had collaborated during the Uruguay Round to impose an Agreement on Agriculture that prioritised their interests while neglecting the rest. Agricultural exporting countries and those with defensive interests alike were dissatisfied because this agreement allowed the big two to increase subsidies on agriculture with the vast majority of other members were left out in the cold. The US and EU attempted the same strategy again, reaching an understanding that protected each other's interests, sidelining all others. We took the initiative, along with Brazil, to form a new group comprising major developing countries like China, Egypt, South Africa, Thailand and others. This proved to be an unyielding opposition to the big two, resulting in the talks breaking down at the Cancun Ministerial Conference in 2003. Nevertheless, we recognised that problems could be addressed only through negotiations and that we needed to correct some of the mistakes made during the Uruguay Round through the new round of talks initiated in 2001 at Doha. We collaborated with other countries to endeavour to get the negotiations back on track through the July Framework Agreement of 2004. Unfortunately, thereafter there was no progress in the talks, and the Doha work programme was ultimately abandoned after many years of discussions.
The Mainichi
24-05-2025
- Business
- The Mainichi
What do rice varieties imported to Japan taste like? Appraiser says they're all good
TOKYO -- As rice prices remain high in Japan amid shortages, imported rice has become a more common sight in supermarkets. While it is indeed cheaper than domestic rice, how does it reach store shelves, and how does it taste? Over 10% cheaper than domestic rice Major supermarket chain Seiyu, headquartered in Musashino, Tokyo, began selling "Musubi no Sato," a Taiwanese short-grain rice variety similar to Japanese rice, in 5-kilogram bags from November 2024. As of mid-May 2025, the price was 3,769 yen (about $26) including tax, more than 10% cheaper than the average for domestic rice. Sales have apparently been strong, with a spokesperson commenting, "Amid rising rice and commodity prices, we considered a wide range of options. We decided to offer this product because its flavor and texture are close to those of Japanese rice." The "rice panic," where rice disappeared from store shelves, occurred in the summer of 2024. Shortages persisted even after the harvest season in autumn, and prices remain high despite the government releasing stockpiled rice. According to the agriculture ministry, the average price of rice sold in supermarkets nationwide from May 5 to 11 was 4,268 yen (around $30) per 5 kg, including tax. This was a 54-yen (approx. 40 cents) increase from the previous week and more than twice the price of the same period last year, which was 2,108 yen. Now, relatively inexpensive imported rice has become more prominent in stores. Expansion of private-sector imports The Japanese government imports about 770,000 metric tons of rice annually with zero tariffs under the "minimum access" quota based on the 1993 Uruguay Round of the General Agreement on Tariffs and Trade. Major import partners include the United States, Thailand, Australia and China, with about 100,000 tons designated for staple food use. The rest is used for processed foods like rice crackers or as feedstuff. Although the staple portions often went unsold at government auctions, all of it was successfully auctioned off in fiscal 2024 for the first time in seven years. The Taiwanese rice sold by Seiyu is also sourced through this framework. Recently, beyond the minimum access framework, trading companies among others are increasingly importing rice at a tariff of 341 yen (about $2.40) per kilogram. According to the ministry, private-sector imports expanded from 250 tons in fiscal 2019 to 991 tons in fiscal 2024 as of the end of January 2025. Kobe-based Shinmei Holdings Co., which is Japan's largest rice wholesaler and also counts a sushi chain among its group companies, had not imported rice before but plans to import 20,000 tons of American rice in fiscal 2025 for both business and retail sales. Retail giant Aeon Co., headquartered in Chiba, will also start selling a new product called "Karoyaka," 100% American rice imported outside the minimum access quota, mainly in urban areas starting June 6. It will be priced at 2,894 yen (roughly $20) for 4 kg, including tax. Imports not well accepted during 1993 panic Meanwhile, imported rice reminds many people in Japan of the rice panic of 1993, when the domestic crop failed drastically. At that time, rice from countries like the United States, China and Thailand was urgently imported and appeared on store shelves, but was not accepted well by consumers. Will the Reiwa-era rice crisis lead to a similar situation? "They're all sending good rice," says Hideyuki Suzuki, chairperson of the Japanese Association of Rice Taste Appraisers, headquartered in Osaka. The association annually holds the "International Contest on Rice Taste Evaluation" to compare the taste of newly harvested rice, with about 5,000 entries in the 26th edition in fiscal 2024. Suzuki, who has appraised rice from countries including the United States, Australia, China, South Korea, Thailand and Vietnam, in addition to Japan, emphasizes, "Rice from each production region has its own characteristics." Japan is known for its short-grain Japonica variety, characterized by its stickiness. It has a thick "umami layer" on the surface, making it shine when cooked. It retains moisture, so it doesn't harden over time, making it ideal for eating plain, Suzuki says. Short-grain varieties from China and Taiwan have almost the same characteristics as Japanese rice. In contrast, short-grain rice from South Korea has a lighter flavor, apparently making it easier to eat with rice bowls with toppings as the broth soaks into the rice. Long-grain varieties from Thailand and China have less moisture, making them suitable for pilafs and curries. They are also delicious when made into risotto with the core of the grain slightly undercooked. Medium-grain varieties, common in the United States and Australia, have a certain chewiness. Suzuki advises, "It's not that they're 'hard,' but they're ideal for those who want to enjoy the 'grainy' texture." Choosing based on more than just price According to the agriculture ministry, domestic demand for staple rice from July 2023 to June 2024 was 7.05 million tons. While staple rice from the minimum access quota accounts for about 100,000 tons annually, imported rice remains a small portion but may become more familiar in the future. Suzuki explains, "We always eat the world's best rice, which is Japanese, but we may be entering an era where rice from around the world becomes available. Instead of buying just because it's cheap, we should be wise in choosing, such as by having the knowledge to cook according to each rice variety's characteristics."
Time of India
03-05-2025
- Business
- Time of India
Trump's divide & prosper mantra, and how India can strategise
Game On: US will be in a hurry to do deals before US consumers feel the pinch of tariffs The assault on the global trading regime by US President Donald Trump, especially through the reciprocal tariffs announced on April 2, provides a fertile ground for examining negotiating strategies. It is common knowledge within the trade policy community that the US failed to secure most of its negotiating objectives in the Doha Round of multilateral trade negotiations at the WTO, which commenced in 2001. On many issues of its interest, it was repeatedly checkmated by multiple coalitions of developing countries. The reciprocal tariffs were, thus, a bid to compel recalcitrant countries, such as India, Indonesia, Brazil, South Africa etc. to come to the negotiating table. With most countries keen on preserving their export prospects in the US market, they are likely to be agreeable to the US demands, many of which they had previously resisted at the WTO. Further, by shifting the negotiations from the WTO to a bilateral forum, Trump has reduced the possibility of developing countries banding into coalitions to oppose the reciprocal tariffs. Divide and prosper is the mantra for success behind forum shifting. In an attempt at diminishing the economic prospects of China, against which the big stick may not be effective, Trump is resorting to brinkmanship. With China not showing any sign of backing off, Trump's strategy is likely to centre around finding a face-saving solution. Else his credibility could take a hit, which might even encourage some of the larger developing countries to think twice before offering concessions to the US in their bilateral negotiations. It is relevant to note that by focusing on high tariffs of India and many other developing countries, Trump appears to have won the battle of perception. No doubt, the tariffs of the US are substantially lower than those prevailing in many countries. However, this is directly related to the outcome of the Uruguay Round of GATT negotiations , which entitled many developing countries to maintain high tariffs. The success of issue framing can be gauged from the reality that most commentators do not even make a passing reference to Trump's tariffs being illegal, even though they breach multiple commitments of the US at the WTO. Where does India find itself in this web of negotiating strategies? Trump has said that America's tariff negotiations with India are 'coming along great,' and a trade deal with New Delhi may happen soon. But even before the US imposed reciprocal tariffs, the two countries had decided to initiate negotiations for a bilateral trade agreement. India is likely to use this opportunity to seek reduction in tariffs imposed on it and perhaps also for securing new market access in labour-intensive products. Given the asymmetry in the economic and political clout between India and the US, India may be compelled to bargain on terms set by the US. However, there could be a deadlock at the negotiating table if the US insists on extracting concessions from India in sensitive areas such as govt procurement, agriculture and intellectual property rights. What strategy should India adopt for grappling with such an eventuality? While India engages in bilateral negotiation with the US, it must not forego the possibility of collectively working with other countries for protecting and promoting its trade interest vis-a-vis the US. India must also work towards preventing a power-based regime from replacing the rules-based trade order. This would strengthen its hands in bilateral negotiations and also increase its options. Overall, multiple negotiating strategies appear to be at play behind the US tariffs. While Trump seeks to leverage his country's asymmetric power at the negotiating table, whether the strategies will succeed is likely to depend on how his administration exploits two other ingredients for negotiating success — information and time. By negotiating separately and simultaneously with many countries, the US has positioned itself to have complete information about the concessions being put on the table by various countries. Most countries are likely to be unaware of what concessions others are offering to the US. The US is likely to exploit this situation of significant information asymmetry for extracting maximum concession from others, while conceding little ground itself. Further, from the perspective of US strategy, it is essential that countries are rushed into concluding the bilateral negotiations before US consumers start feeling the pain of empty retail shelves. Time may also be of essence in containing further uncertainty in financial markets. This might explain the rationale for the US seeking to conclude many bilateral negotiations within the 90-day period. The coming few months are likely to provide a fascinating glimpse of whether the strategies being deployed by the US help it in securing what it aspired for during the Doha Round and maybe much more. The author is an international trade expert and author of the recently published book 'Strategies in GATT and WTO Negotiations '. Views are personal.
Hindustan Times
22-04-2025
- Business
- Hindustan Times
Chandigarh: US tariffs targeting developing nations illegal, says expert
The reciprocal tariffs imposed by the USA on developing countries are in violation of the international trade law, said Abhijit Das, international trade expert, at a session here on Monday. Themed 'Trump's tariff hike: The big picture and implications for India', the discussion was organised by the Institute for Development and Communication in collaboration with Chandigarh University in Sector 38-A. Das said the Uruguay Round (1986-93) that led to the creation of the World Trade Organisation had provided leverage to developing countries to impose higher tariffs on developed countries to give them hope for development. Therefore, Trump's claim to put trade restrictions on developing countries to have trade balance between nations is baseless, he said. For India, it is going to be difficult to negotiate with bilateral trade ties with the USA as the Trump government has a long list of grievances from India, Das added. The tariff hike is in alignment with a broader trend of economic nationalism, marked by the assertion of militaristic power in trade policy, experts mentioned. Atul Sood from Jawaharlal Nehru University argued that such protectionist measures are not only exclusionary but also structurally disadvantageous to emerging economies like India, which face limited negotiating power and increased vulnerability in an increasingly polarised global economic order. The panellists agreed that tariff war had the potential to restructure the global order. The resulting tariff wars are reshaping comparative advantages, disrupting supply chains and generating uncertainty across international markets. For India, this evolving landscape presents both opportunities and challenges—ranging from recalibrated trade negotiations with the US to the need for strategic alignment amid rising protectionism and inflationary pressures worldwide, the panellists mentioned. The session was chaired by Pramod Kumar, chairperson, IDC.
