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Insights into Editorial: A rocky road for strategic partners


Insights into Editorial: A rocky road for strategic partners


 

Context:

The Donald Trump administration’s recent actions threaten the foundation of trust and flexibility on which India-U.S. relations are premised.

However, they seem to be part of a pattern progressively visible in American foreign policy in which bullying friends has become the name of the game.

 

Recent USA’s Insensitive Approaches:

The Trump administration’s insensitive approach towards its allies in Western Europe by denigrating the North Atlantic Treaty Organisation and the European Union (EU).

It threatening to impose tariffs on EU goods in connection with trade disputes and Europe’s relations with Russia, and Washington’s unilateral withdrawal from the Iran nuclear deal that roiled its European partners are all evidence of this policy.

These stand in sharp contrast to the first year of the Trump administration when the U.S. was actively wooing India as a strategic counterweight to China and because of its rapidly expanding market that was seen as providing great opportunities for American business.

In a major foreign policy speech in October 2017, then U.S. Secretary of State declared that India and America were “two bookends of stability — on either side of the globe” and that the “emerging Delhi-Washington strategic partnership” was essential to anchor the rules-based world order for the next hundred years.

The third and latest instance of unwelcome U.S. pressure was the announcement on May 31 that, beginning June 5, India will be removed from the preferential trade programme, known as the Generalised System of Preferences (GSP)

 

Generalised System of Preferences (GSP):

GSP gives developing countries easier access to the U.S. market and lowers U.S. duties on their exports.

India is the largest beneficiary nation under the GSP scheme and exported goods worth $6.35 billion to the U.S. under the preferential regime last year.

This is close to 10% of the goods exported by India to the U.S. While the Indian reaction to the American decision has been mild so far that the Commerce Ministry termed it “unfortunate”.

Mr. Trump signed off on a presidential decree to that effect alleging, “India has not assured the United States that India will provide equitable and reasonable access to its markets.”

It is bound to cause resentment in New Delhi, especially since U.S. Commerce Secretary had assured the government that benefits would not be cut off until after India’s elections, thus allowing the new government time to reflect on the issue.

 

World’s richest nation to target a developing nations in the name of “fair trade”:

India is a lower middle-income developing economy and will remain so for the foreseeable future.

  • According to the International Monetary Fund (IMF), the per capita national income (gross domestic product, GDP) of the US, in purchasing power parity (PPP) terms was US$62,606 in 2018, compared to $7,874 for India.
  • India does not hide behind high tariff walls, as charged by President Trump, since it has consistently run a trade deficit with the rest of the world.
  • The US, too, has long run a trade deficit with the rest of the world, but for very different reasons and at a very different level of development.
  • At any rate, the US conducts all its trade in its own currency that it prints at will. China, Japan and Germany are the ones that enjoy a trade surplus with the rest of the world.
  • India has a trade surplus with the US, but Trump’s complaint on that count is like a rich man complaining that he always gives gifts to his poorer friends, and they never give him a return gift.
  • India has, in fact, been a bearer of gifts of another kind. It has exported several generations of highly talented professionals who have contributed to ensuring that the US remains a world leader in technology and knowledge-based businesses.
  • A report prepared by the late K Subrahmanyam, as chairman of the Task Force on US Global Strategy: Emerging Trends and Long Term Implications (June 2006):
    • made the telling point that the US has been able to sustain its global competitiveness in the knowledge-based sectors of the economy by accessing, among other things, the talent of successive generations of bright young Indians. Indian Americans are actively helping “Make America Great Again.”

 

Conclusion:

Taken together, these three decisions indicate that Washington is impervious to Indian strategic concerns and economic interests despite its earlier pronouncements that it considers India a valued “strategic partner”.

These decisions are part of a unilateralist syndrome that currently afflicts American foreign policy.

Mr. Trump and his advisers no longer seem to discriminate between friend and foe when making important policy decisions.

Such an attitude does not bode well for the future of America’s relations with its friends and allies. Washington appears to have overlooked the fact that even the “indispensable nation” needs reliable friends and allies.

 

Way Forward:

India’s policy of “multi-alignment”, as it has been put, should be welcomed by a US that is finding it difficult to manage its reduced clout in world affairs.

Trump’s aggressive tactics can at best yield short-term dividends without offering long-term benefits for the US.

India’s new Minister of External Affairs and an outstanding diplomat S. Jaishankar with a wealth of experience in dealing with Washington, will have to convince American policy-makers that this maxim is relevant to the U.S.’s relations with India.

Mr. Jaishankar should subtly communicate to his interlocutors that this is especially true now that the international system is becoming progressively multipolar, thus increasing foreign policy options available to Indian policymakers.

Leaders on both sides must keep in mind that these are short-term bumps that must be avoided, even if they incur some level of political cost.