A comprehensive trade package need of the hour

The United States under President Donald Trump has been a mixed bag for India especially in the economic arena but so strong is the unpredictability of his regime that there is a foreboding of worse things to come. The Chinese have got the wrong end of the stick so far with an assault on Chinese imports but it could well be the turn of India to squirm under Trump’s measures to whittle down India’s rising status as an economic entity.

Even as US trade curbs on Chinese imports played out in full fury, there was an expectation that India would tend to benefit from the new US measures to contain China economically. But Trump has proved that he is a hard-boiled, ruthless opportunist who has difficulty in seeing beyond his nose.

If, in the process, he is ingratiating himself to the protectionist lobby in the US, it is to his benefit though it gives him a poor international image. If the job market in the US is reviving, he is euphoric, though how far that would go in ensuring a second term for Trump is anybody’s guess.

Opposition to Trump within the US has been growing by the day and it would need some tightrope walking and deftness on his part to ward off the challenge from forces out to deny him a second term. There is no politics today without an economic motivation and Trump’s crude ignoring of India in his visits to various countries has the stamp of his bloated ego and arrogance.

The manner in which he spurned Modi’s invitation to be the chief guest at the Republic Day parade compromised India but it also showed the US in poor light before the vast Indian diaspora in the US which watches every signal from the US administration with a hawk eye.

It is indeed strange that the US had the highest trade deficit for 2017 with China — $566 billion — but tends to taunt India for a miniscule $22-billion deficit. In his State of the Union address on February 5, Trump emphasising US efforts for a trade deal with China, said he had ‘great respect’ for Chinese president Xi while earlier he had mocked Prime Minister Narendra Modi when listing India’s aid to Afghanistan, making short shrift of it.

It is, of course, quite possible that Trump’s conciliatory remarks about Xi were mere posturing and that the US president has a more meaningful and sincere relationship with India while pretending to be even-handed.

But there is no denying that Trump is unpredictable and dealing with him is no mean task. Modi, too, cannot be pushed around beyond a point and has built up an international clout that is the envy of many world leaders. There are alarm bells in India over a possible decision by the US Trade Representative to withdraw the Generalised System of Preferences status.

Under this, India is able to export about 2,000 product lines to the US under zero tariff.  The revocation of the GSP, which was first extended to India in 1976 as part of a global concession by the US to help developing countries build their economies, will be a blow to Indian exporters,

and the biggest in a series of measures taken by the Trump administration against India to reduce its trade deficit. It would inevitably hit Indo-US relations. Last March, the US began imposing tariffs on several Indian products, in line with Trump’s thinking.

The next month, the US trade rep started a review of India’s GSP status, based on complaints of trade barriers from India it had received from the dairy industry and manufacturers of medical devices. In November last, the US withdrew GSP status on at least 50 Indian products hinting at the shape of things to come which could affect India’s trade scene.

As a retaliated measure, India proposed tariffs of about $235 million on 29 American goods in an action that drew frowns from the Trump administration, but held its hand five times in the past year hoping that a negotiated trade settlement will come through.

The latest deadline expires on March 1 and that could be a watershed either way in ties between the two countries. India has also made efforts to address the trade deficit with purchase of American oil, other means of energy and aircraft. Yet, after several rounds of talks, there is little headway.

US officials say the decision on data localisation for all companies operating in India, and the more recent tightening norms for FDI in e-commerce have dampened spirits. There is indeed need for greater spirit of accommodation between the two sides but that is not forthcoming. President Trump would indeed have to think hard whether his toughness of trade policy fits in with his desire to build India up as a counterpoise to China in its overall policy of containing Chinese hegemonic designs in the world at large.

Indeed, on the trade front the need of the hour for India is a comprehensive trade package, rather than try to match each concern product by product. The impending visit of US Commerce Secretary Wilbur Ross to India will hopefully take the two countries closer in understanding each other’s viewpoint on this issue in all its dimensions. All eyes are, therefore, on this visit even as India waits for Trump to come to India on an official visit and reaffirms the closeness of ties with India.

Kamlendra Kanwar is a political commentator and columnist. He has authored four books.

(For all the latest News, Mumbai, Entertainment, Cricket, Business and Featured News updates, visit Free Press Journal. Also, follow us on Twitter and Instagram and do like our Facebook page for continuous updates on the go)

Free Press Journal