Unpredictable norms key impediment to bilateral trade

Syllabus: General Studies Paper 2

Context:

U.S. Trade Representative recently flagged India’s ‘unpredictable’ regulatory norms, high tariffs and market access restrictions as key impediments to bilateral trade.

• The US emphasised America’s continued interest in agriculture market access and conveyed that “worker-centric” policies will be the pivot for the Joe Biden administration’s approach to trade policy.

Background 

• Recent trade visit is to revive the U.S.-India Trade Policy Forum (TPF) after a four-year hiatus, US stated that the relationship is a top priority for President Biden, but highlighted that bilateral trade “never seems to quite live up to its significant potential”.

Key Highlights of the Trade talk

• Signalling a major switch to a “worker-centric” focus in U.S. policy, the Representative said: “The President is convinced that the U.S. policy needs a fundamental shift to ensure that both nation’s policies and actions focus on the impact that trade and trade agreements have on the lives of real working people.”
• The US will work closely with the Indian Government ‘colleagues’ including Labour and Employment Minister on connecting trade “more directly with working people”.
• There is a huge potential for growth in our two countries, in areas like the digital economy, services, health-related trade and yes, even agriculture. The US believes that a revived TPF can help our trade relationship keep pace with our other areas of engagement.
• India and the U.S. also face shared challenges like climate change and sustainability, vulnerable supply chains and promoting market-oriented principles and structures. These are areas that are ripe for closer collaboration now, underlining that the U.S. is committed to ensuring a robust and sustainable trade partnership.
• Delivering results and further integrating our two economies will require concerted efforts from our Governments, businesses, civil society, our people as both workers and consumers.

India’s Take

• The trade policy forum is being rejuvenated after “languishing for four years”. India expressed confidence that the two sides will be able to resolve issues in an amicable manner and send a message to the world that the U.S. and India are strong partners. 
• Citizens from both our countries look towards India-U.S. partnerships with great optimism and hope. The U.S. and India share a partnership that can not only help each other but the entire world to recover if we were to work together.

India US Ties

• The relations between India and the United States have evolved in the post-Cold War era. Both countries have established strong bilateral relations and continue to contribute to the stability and prosperity of the world. 
• As two mature and vibrant democracies, the relations between the two countries are based on a foundation of shared values and common interests, including a commitment towards Democratic principles.
• As the ideological Cold War ended after a  myriad of international convergences and divergences, India was forced to look to the West given the paradigm shift in the geopolitics Of the world. Today India and the US are among the most vibrant and foreign cohorts and strategic partners.

Significance of India US relations

• Energy partnership –

• • • India and the US signed a civil nuclear deal in 2008. It provides US assistance to India’s civilian nuclear energy programme and expands India US cooperation in energy and satellite technology. This was a time when the relations between the two countries peaked and it was considered as a game-changer in Indo US relations.

• Economic relations – 

• • The trade and economic partnership between the US and India has been a key component in the bilateral relations between the two countries. In 2018, the Indian manufacturing trade in the US reached 50.1 billion U.S. dollars for the first time surging by approximately 6 billion U.S. dollars over the previous year.

• Defence Partnership- 

• • Defence relations have emerged as a major pillar in India-U.S. strategic partnership. The two countries signed the ‘New Framework for India-U.S. Defence Relations’ in 2005 and resulted in an intensification of defence trade, joint exercises, personnel exchanges, collaboration and cooperation in maritime security and counter-piracy, and exchanges between each of the three services. 
  • The Defence Framework Agreement was updated and renewed for another 10 years in 2015. 
  • The US has become India’s second-largest arms supplier. 
  • The two countries signed the Basic Exchange Cooperation Agreement in 2019. Before that the Logistics Exchange Memorandum of Agreement and Communications Compatibility and Security Agreement was signed between the two. 
• Both the countries cooperate closely at multilateral organisations like the United Nations, G20, Association of Southeast Asian nations regional forum, World Bank, etc. In 2019 the US joined India’s coalition for disaster resilient infrastructure to expand cooperation on sustainable infrastructure in the Indo- Pacific region.

• Counter-terrorism and internal security cooperation

• • In counter-terrorism has seen considerable progress between the two countries with intelligence sharing, information exchange,  operational cooperation, counter-terrorism technology and equipment. 
  • The India US counter-terrorism cooperation initiative was signed in 2010 that aims to expand collaboration on counter-terrorism, information sharing and capacity building. 
  • The two sides have agreed to work on a joint plan to counter the threat of improvised explosive devices.

• Energy and climate change 

• • The US India energy dialogue was launched in 2005 to promote trade and investment in the energy sector. 
  • Currently, there are six working groups under the energy dialogue in oil and gas, coal, power and energy efficiency, new technologies and renewable energy, civil nuclear cooperation and sustainable development. As a priority initiative under the partnership to advance clean energy, 
  • The US Department of Energy and the Government of India established the joint clean energy research and development centre that has been designed to promote clean energy innovations by a team of scientists From India and the US.

• Education

• • Cooperation in the education sector has been an integral part of the strategic partnership between the two countries. 
  • The Fulbright programme was renewed in 2008, with the enhanced mandate and joint funding with the aim of providing more student and scholar exchange grants. 
  • There are about 1.5 lakh, Indian students, pursuing advanced degrees in the USA.

• Space

• • A bilateral joint working group on civil space cooperation provides a forum for discussion on joint activities in space that includes 
    • exchange of scientists; 
    • OCM2, INSAT3D collaboration; 
    • Cooperation on Mars mission; 
    • nano-satellites; 
    • carbon /ecosystem monitoring and modelling; 
    • feasibility of collaboration in radio occultation;
    • Earth Science Cooperation; 
    • international space station; 
    • global navigation satellite systems; 
    • L&S band SAR;
    • space exploration cooperation; 
    • Space debris mediation.

• Science and technology

• • • India US science and technology cooperation has been steadily growing under the framework of the US India science and technology cooperation agreement that was signed in 2005. 
    • The US India science and technology endowment fund that was established in 2009 promotes the commercialization of jointly developed innovative technologies with the potential for positive societal impact.

• Health sector

• • Under the 2010 US India health initiative, forward working groups have been organised in areas of non-communicable diseases, infectious diseases, strengthening health systems and services, and maternal and child health. 
  • The global disease detection India centre was established in 2010 to build up the disease surveillance and epidemiological capacity in India. U.S. National Institutes of Health, Indian council of medical research, and India’s biotechnology Department have developed a robust relationship in the biomedical and behavioural Health Sciences, research related to HIV, infectious diseases diabetes cardiovascular diseases mental health and low-cost medical technologies.

• People to people ties

• • • Strong people to people ties between India and the USA is reflected in a four million-strong Indian American diaspora that has been a tremendous source of strength in the partnership between the two countries.

• Strategic importance

• • The US under its pivot to Asia policy views India as an ideal balancer to cheque the aggressive rise of China. Due to this, it has formulated the concept of the Indo Pacific to counter China in the South China Sea and the Indian Ocean. 
  • India sees this as an opportunity to counter China in the maritime domain in order to preserve the freedom of navigation and the rules-based order. 
  • The two countries are also a part of the international grouping of the Quad or the Quadrilateral Security Dialogue along with Japan and Australia that aims to establish multilateral rules-based world order.

The Hindu Link: https://www.thehindu.com/todays-paper/tp-national/unpredictable-norms-key-impediment-to-bilateral-trade/article37636854.ece

Question: Trade relations between India and USA while growing in past years are still far below their potential. Elucidate the policy constraints which are inhibiting this growth