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The First US-India 2 + 2 Talks: What to Expect (or Not Expect)

On September 6, U.S. Secretary of Defense Jim Mattis and U.S. Secretary of State Mike Pompeo will be in New Delhi to start the much-awaited first round of the U.S.-India 2 + 2 talks with their Indian counterparts, Nirmala Sitharaman and Sushma Swaraj. The talks—initially scheduled for January, then reset for May—were again postponed because of “unforeseen” logistical problems on the American side.

The delay has given rise to at least one new issue, which is expected to be on the agenda September 6—namely, sanctions on Iran. In May, U.S. President Donald R. Trump re-imposed all the sanctions on Iran that had been relaxed under the Obama-brokered deal in 2015. Trump also imposed new sanctions, including a ban on buying petroleum and petrochemical products with a number of Iranian oil companies and on doing business with Iran’s ports and shipping sector. These sanctions are due to be enforced from November 4.

That policy decision—and President Trump’s tweet: “Anyone doing business with Iran will NOT be doing business with the United States”—brings the issue to India’s doorstep. Bilateral trade between India and Iran amounted to $12.9 billion in 2016-2017: India imported $10.5 billion worth of goods, mainly crude oil, and exported commodities worth $2.4 billion. Moreover, India has other interests in Iran, in particular a commitment to build the port of Chabahar on the Gulf of Oman. When completed, that port will open up a very useful trade route to Iran, Afghanistan and Central Asia for India.

On May 28, at a press conference in New Delhi, Indian External Affairs Minister Sushma Swaraj said New Delhi’s policy was to honor only United Nations sanctions, not sanctions imposed by individual countries.

In all likelihood, the 2 + 2 will not make this “violation” by India a major issue. On June 28, Reuters cited an unnamed State Department official saying that the United States is “prepared to work” on a case-by-case basis with countries on sanctions issues. And, in that context, India, having wide-ranging relations with the United States, is almost certain to be exempted.

A second irritant in the relationship is the recent decision by President Trump to impose tariffs on imported goods from countries with a balance of trade in their favour. Although Trump’s principal targets seem to be China, the European Union and Canada, India has been nominally affected, as well. Last March, the Trump administration announced it would impose a 25 per cent tariff on steel and a 10 per cent tariff on aluminum imports from India. New Delhi sends only some $1.5 billion worth of steel and aluminum to the United States each year, but it worries that Washington might also increase tariffs on items such as pharmaceuticals, which constitute a larger source of revenue for India.

In response, India has proposed hiking tariffs on a number of American products to recoup trade penalties worth $241 million, according to a World Trade Organization filing. The retaliatory measure is equal in dollar value to the U.S. tariffs on Indian steel and aluminum.

Another irritant for Washington is the firming up of India’s decision, following years of deliberations, to buy five S-400 Triumf air defence systems from Russia. From available reports, it seems that deal is very close to going through, and some media reports even suggest that the deal will be formally signed when Russian President Vladimir Putin visits India in October for the annual bilateral summit meeting with Indian Prime Minister Narendra Modi.

The S-400 deal not only ignores Washington’s desire that India buy arms from America rather than Russia, but it could constitute a violation of U.S. law. The “Countering America’s Adversaries Through Sanctions Act” (Public Law 115-44) (CAATSA), which President Trump signed into law on August 2, 2017, imposed new sanctions on Iran, Russia and North Korea.

Though the S-400 deal will most likely figure in the talks, it is doubtful that Washington will turn it into a conflict issue. When Principal Deputy Assistant Secretary of State for Political-Military Affairs Tina Kaidanow visited India in June, she never raised the issue.

While it is necessary to resolve these irritants, both Washington and New Delhi realize the importance of underplaying their differences given the scope and aims for the relationship. U.S. Ambassador to the United Nations Nikki Haley, who was in India in June, made clear that the talks are a “priority.” In May, Secretary of Defense Jim Mattis spoke at the Honolulu HQ of the U.S. Pacific Command, renaming it the “U.S. Indo-Pacific Command” and stating that “the re-branding is about recognizing the reality of India’s rise and role in regional and global security.” Mattis added, according to Defense One, “The U.S. wants to work with India to help it expand its relationships in the region.”

The clearest signal of Washington’s intent to further consolidate a long-term relationship with India came in early August when the United States granted India Strategic Trade Authorization-1 (STA-1) status, paving the way for high-technology product sales to New Delhi, particularly in civil space and defence sectors. In Asia, only Japan and South Korea, both close defence and economic allies of the United States, have that status.

It is evident that all issues under discussion and all policy projections will be placed on the table on September 6, and it is also likely that there will be sincere efforts by both parties to resolve the apparent incongruities amicably, with the intent to enhance cooperation in the defence and economic sectors.