EDITORIAL ANALYSIS : From state visit to a more robust trade relationship

Source: The Hindu, The Hindu

• Prelims: Current events of international importance(India-US relations), disputes with China(Mapping) etc
• Mains GS Paper II: Bilateral, regional and global grouping involving India, Significance of Indo-Pacific for India etc

ARTICLE HIGHLIGHTS

• The Prime Minister’s State visit to the USA was historic.
  • The first for an Indian head of state in 14 years, and only the third for an Indian leader in 75 years since Indian Independence

INSIGHTS ON THE ISSUE

Context

India-US Relations:

• India-U.S. bilateral relations have developed into a “global strategic partnership.
• Relationship is based on:
  • Shared democratic values
  • Increasing convergence of interests on bilateral, regional and global issues.

Areas of Cooperation:

What state visit of PM to USA demonstrated?

• The Biden administration’s intense desire to cultivate India as a durable, long-term partner in a variety of realms
  • Including in the United States’ strategic competition with China for the foreseeable future.
• It conveyed a full range of areas of cooperation and collaboration between them
  • defense trade
  • emerging technologies
    • such as in Artificial Intelligence and space exploration.

Trade relationship between the two countries:

• It is growing — surpassing S.$120 billion
  • It continues to underperform relative to the sheer potential.
• The announcement for potential joint manufacture of General Electric (GE) Aerospace’s F414 engines in India by GE and Hindustan Aeronautics Limited
  • To power India’s indigenous Light Combat Aircraft MK2
• The twin-engine Advanced Medium Combat Aircraft MK1 as well as the purchase of 31 high-altitude, long-endurance Predator-MQ-9B armed unmanned aerial vehicles
• Military cooperation between the two nations
  • India has bought from the U.S.
    • C-130 and C-17 Globemaster transport aircraft
    • AH-64E Apache attack helicopters
    • CH-47 Chinook and MH-60R multi-role helicopters
    • P-8I maritime patrol aircraft
    • M777 ultra light howitzers
  • The U.S. has been aggressively pitching its fighter jets, the F-16 and F/A-18, for the Indian Air Force and the Indian Navy.
  • India and the U.S. had tried and shelved an earlier engine development effort under the Defence Technology and Trade Initiative
  • The new jet engine deal is an investment in each other
    • It addresses the shared security concerns, while continuing to navigate the disagreements.

Recent trade deals by India:

• Free trade agreements (FTAs) with the United Arab Emirates and Australia
• India launched or reinvigorated negotiations for parallel deals with the European Union, the United Kingdom, and Canada.

The U.S.’s approach:

• It has evolved away from FTAs and discovered a better approach to:
  • trade
  • emphasizing resilient supply chains
  • reshoring or friend-shoring
  • prioritizing labour rights
  • climate-friendlier production over craven and mistaken globalization.

Issue with this policy:

• It ignores all the objectives that could be robustly addressed in a revamped FTA agenda.

Evolution of India’s trade relations with various countries:

• India’s agreements to date fall far short of the U.S. gold standard
  • e., the U.S.-Mexico-Canada Agreement (USMCA), but the gaps are decreasing.
• S. and India have been able to agree to transactional concessions in their respective markets
  • g., mangoes and pomegranates for India in exchange for cherries, hay and pork for the U.S.
  • Through the bilateral Trade Policy Forum (TPF) even without an active FTA negotiation.
• In agriculture, India has shown surprising readiness to gradually open its market when offered opportunities to win concessions in return through FTAs.
• Australia(Economic Cooperation and Trade Agreement): It obtained important gains in the Indian market for wine, wool, and sheep meat, among other goods
  • India won duty-free access to the Australian market.

Way Forward

• On FTA negotiations there could be more extensive agreement on the agricultural sector writ large
  • In addition to the full range of trade in goods and services and facilitation of higher levels of investment between the two.
• The PM’s State visit should be a starting point for a more ambitious trade agenda going forward.
• S. and Indian trade negotiators know how to go small, and even achieve results along the way.
• The trade relationship deserves more attention, and a stronger mandate from the leaders of both administrations.
• With greater ambition, the often-mentioned target of $500-$600 billion in bilateral trade by 2030 can easily be attained and surpassed.
• India is exhibiting a remarkable openness to negotiating new trade relationships with important partners around the world
  • It is demonstrating genuine commitment to revisiting long-standing positions
  • It pursues policies to attract and grow domestic manufacturing value chains and reduce over-dependencies on other countries.
• India is a potential node in the diversification of supply chains.
  • The US government is going out of its way to signal to the private sector to look at India seriously.

QUESTION FOR PRACTICE

The USA is facing an existential threat in the form of China, that is much more challenging than the erstwhile Soviet Union.” Explain.(UPSC 2021) (200 WORDS, 10 MARKS)