Foreign Policy Watch: India-United States

Trade and climate, the pivot for India-U.S. ties

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- India-US trade and climate partnership

Context

The fate of the grand strategic ambitions of the Indo-US relationship may depend substantially on how well they collaborate in two areas to which their joint attention is only belatedly turning — climate and trade.

Importance of climate change and trade to India-US partnership

  • Strategic partnerships capable of re-shaping the international global order cannot be based simply on a negative agenda.
  • Shared concerns about China provide the U.S.-India partnership a much-needed impetus to overcome the awkward efforts for deeper collaboration that have characterised the past few decades.
  • What risks being lost is a reckoning with how interrelated climate and trade are to securing U.S.-India leadership globally, and how their strategic efforts can flounder without sincere commitment to a robust bilateral agenda on both fronts.

India-US collaboration on climate change and challenges

  • India and the U.S. are collaborating under the Climate and Clean Energy Agenda Partnership.
  • In parallel, there are hopeful signs that they are now prioritising the bilateral trade relationship by rechartering the Trade Policy Forum. 
  • At COP26 in Glasgow India announced a net zero goal for 2070, it has called for western countries to commit to negative emissions targets.
  • Challenges: India’s rhetoric of climate justice is likely to be received poorly by U.S. negotiators, particularly if it aligns with China’s messaging and obstructs efforts to reach concrete results.

Collaboration on trade

  • The failure of the U.S. and India to articulate a shared vision for a comprehensive trade relationship raises doubts about how serious they are when each spends more time and effort negotiating with other trading partners.
  • Protectionist tendencies infect the politics of both countries these days, and, with a contentious U.S. mid-term election a year away, the political window for achieving problem-solving outcomes and setting a vision on trade for the future is closing fast.

Climate-trade inter-relationship

  • Climate and trade are interrelated in many ways.
  • If governments, such as India and the U.S., coordinate policies to incentivise sharing of climate-related technologies and align approaches for reducing emissions associated with trade, the climate-trade inter-relationship can be a net positive one.
  • India and the U.S. could find opportunities to align their climate and trade approaches better, starting with a resolution of their disputes in the World Trade Organization (WTO) on solar panels.
  • The two countries could also chart a path that allows trade to flow for transitional energy sources, such as fuel ethanol.
  • Shared strategic interests will be undermined if India and the U.S. cannot jointly map coordinated policies on climate and trade.
  • The most immediate threat could be the possibility of new climate and trade tensions were India to insist that technology is transferred in ways that undermine incentives for innovation in both countries or if the U.S. decides that imports from India be subject to increased tariffs in the form of carbon border adjustment mechanisms or “CBAMs”.

Conclusion

Concerted action on both the climate and trade fronts is mutually beneficial and will lend additional strength to the foundation of a true partnership for the coming century.

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