From UPSC perspective, the following things are important :
Prelims level : Trade Policy Forum
Mains level : Paper 3- India-U.S. trade ties
After tumultuous years of Trump administration in trade policies, the article examines the new possibilities under the next U.S. President in trade ties with India.
Approach towards WTO and India
- The new U.S. administration will have more constructive stance on multilateral issues in the World Trade Organization (WTO).
- The Trump administration went out of its way in seriously undermining WTO institutions when the organisation was already in need of reform and new direction.
- The Biden administration is less likely to engage in unilateral tariff increases and more likely to pursue remedies in the WTO.
- In case of India, the Trump administration it pursued an aggressive approach to resolve market access concerns through threats to eliminate India’s benefits under the Generalized System of Preferences programme.
- However, the follow-through was weak.
- The administration was on the brink of concluding a historic bilateral trade deal, yet it lost focus.
5 likely developements
- 1) It is clear that Mr. Biden plans to focus on domestic concerns first.
- There may be trade aspects to some of these efforts, but they may have limited early relevance for a future U.S.-India trade policy.
- 2) Two, as it turns to trade policy, the Biden administration is not likely to place India among its top few priorities.
- Among top priorities will include formulating its approach with China, such as finding alternatives to the Regional Comprehensive Economic Partnership to set new global standards that address China’s practices.
- That said, India should be among the priorities at the next level down.
- 3) The trade deal still pending with the Trump administration remains compelling.
- There could be an early opportunity to conclude these negotiations and for the Biden administration to get credit.
- A bilateral deal will not lead to serious consideration of FTA negotiations any time soon.
- But this first trade agreement could pave the way for later additional small agreements.
- 4) The existing Trade Policy Forum (TPF) met only once over the last four years.
- It seems likely that the Biden administration will see the TPF’s value as a venue for more regular discussions on a range of trade issues.
- 5) A reinvigorated TPF will present new opportunities for the two countries to take up a range of cutting-edge trade issues that will be critical in determining whether the U.S. and India can converge more over time or will drift further apart.
- These include digital trade issues, intellectual property rights and approaches to nurturing innovation, better health sector alignment, and more regular regulatory work on science-based agricultural policies.
The future looks bright for U.S.-India trade under a Biden administration, but that does not mean it will be any easier. It will be critical for leadership on both sides to commit to strong efforts to put the trade relationship on a new footing, which will have to involve a ‘can-do’ attitude to solving problems.
Back2Basics: Trade Policy Forum
- It was established in 2005.
- The Forum is part of the overall United States-India Economic Dialogue, replacing the Trade Policy Working Group pillar.
- It convenes on a regular basis.
- The Forum provides an opportunity to work together to expand trade between the two countries.
- The agenda could cover the following subjects: tariff and non-tariff trade barriers; foreign direct investment; subsidies; customs procedures; standards, testing, labeling and certification intellectual property rights protection; sanitary and phytosanitary measures; government procurement; and services.