Foreign Policy Watch: India-United States

Foreign Policy Watch: India-United States

What is Havana Syndrome?

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Havana Syndrome

Mains level : Sonic Warfare tactics

A US intelligence officer traveling with CIA director William Burns has reported symptoms of Havana Syndrome.

What is Havana Syndrome?

  • Havana Syndrome refers to a set of mental health symptoms that are said to be experienced by US intelligence and embassy officials in various countries.
  • It typically involves symptoms such as hearing certain sounds without any outside noise being present, nausea, vertigo and headaches, memory loss and issues with balance.
  • As the name suggests, it traces its roots to Cuba.
  • In late 2016, US officials in embassy began experiencing sudden bursts of pressure in their brain followed by persistent headaches, feeling of disorientation and insomnia.

How severe is it?

  • In 2018, at least three CIA officers working under diplomatic cover in Cuba had reported troubling sensations that seemed to leave serious injuries.
  • Some officers are being compulsorily retired for their inability to coherently discharge his duty and another needing a hearing aid.

Has Havana Syndrome been reported anywhere else?

  • Since the Cuban incident, American intelligence and foreign affairs officials posted in various countries have reported symptoms of the syndrome.
  • In early 2018, similar accusations began to be made by US diplomats in China.
  • The US media has reported around 130 such attacks across the world including at Moscow in Russia, Poland, Georgia, Taiwan, Colombia, Kyrgyzstan, Uzbekistan, and Austria, among others.

What are the causes of Havana Syndrome?

  • No one is entirely sure. But it is speculated to be a “sonic attack”.
  • Medical examination of the victims began to suggest that the victims may have been subjected to high-powered microwaves that either damaged or interfered with the nervous system.
  • It was said to have built a pressure inside the brain that generated the feeling of a sound being heard.
  • Greater exposure to high-powered microwaves is said not only to interfere with the body’s sense of balance but also impact memory and cause permanent brain damage.
  • It is suspected that beams of high-powered microwaves are sent through a special gadget that Americans have begun calling “microwave weapon”.

Who is doing this in India?

  • Sources in the Indian security establishment say they are not aware of any such weapon being in the possession of an Indian agency.
  • Even if there was one, it is unlikely the government would admit to having acquired such counter-espionage technology given the sensitive nature of intelligence work.

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Foreign Policy Watch: India-United States

The convergence and lag in Indo-US partnership

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- Paradox in debate over relations with the US

Context

As the Indian leadership reviews US ties this week with the visiting Secretary of State, Antony Blinken, a paradox stands out.

Deepening Indo-US ties

  • India and the US have come a long way since the 1990s.
  • There is growing political and security cooperation, expanding economic engagement, widening interface between the two societies, and the intensifying footprint of the Indian diaspora in the US.
  • Convergence of interests: That ambition, in turn, is based on the unprecedented convergence of Indian and American national interests.
  • Agenda for cooperation: The two countries have already agreed on an ambitious agenda for bilateral, regional and global cooperation.

Debate in India over Indo-US relation: A paradox

  • The discourse within India’s strategic community continues to be anxious.
  • Some of the questions that animate the media and political classes have not changed since the 1990s.
  • Issues in the debate: Debate focuses on US’s stand on the Kashmir issue, democracy and human rights and its impact on India-US relations.
  • Contradictory fears: There are also contradictory fears such as whether the US extend full support in coping with China.
  • While we expect the US to give guarantees on supporting us, we insist that India will never enter into an alliance with the US.
  • Small state syndrome in India: As India’s relative weight in the international system continues to grow, it creates much room for give and take between India and the US.
  • Yet, a small state syndrome continues to grip the foreign policy elite.
  • The situation is similar on the economic front.
  • Although India is now the sixth-largest economy in the world, there is unending concern about the US imposing globalisation on India.
  • Even as India’s salience for solutions to climate change has increased, India’s debate remains deeply defensive.

Factors responsible paradox

  • Missing the big picture: The narrow focus on the bilateral precludes an assessment of the larger forces shaping American domestic and international politics.
  • That, in turn, limits the appreciation of new possibilities for the bilateral relationship.
  • Underinvestment in American studies: The problem is reinforced by India’s under-investment in public understanding of American society.
  • Russia and China have put large resources in American studies at their universities and think tanks.
  • The Indian government and private sector will hopefully address this gap in the not-too-distant future.

Policy shifts unfolding in the US

  • Domestic economic policies: If the economic policy drift in the last four decades was to the right, Biden is moving left on the relationship between the state and the market — on raising taxes, increasing public spending and addressing the problem of sharp economic inequality.
  • Economic policy and globalisation: Biden has also joined Trump in questioning America’s uncritical economic globalisation of the past.
  • If Trump talked of putting America First, Biden wants to make sure that America’s foreign and economic policies serve the US middle class.
  • Foreign policy: Biden has concluded that four decades of America’s uncritical engagement with China must be reconstituted into a policy that faces up to the many challenges that Beijing presents to the US.
  •  Biden is also focused on renewing the traditional US alliances to present a united front against China.
  • He is also seeking to overcome Washington’s hostility to Russia by resetting ties with Moscow.

Question of democracy and human rights

  • Democracy is very much part of America’s founding ideology.
  • But living up to that ideal at home and abroad has not been easy for the United States over the last two centuries.
  • Delhi and Washington will also have much to discuss on the challenges that new surveillance technologies and big tech monopolies pose to democratic governance.
  • The exclusive American focus on democracy promotion has been rare, costly and unsuccessful.
  • India’s own experience at spreading democracy in its neighbourhood is quite similar.
  • But that discussion is only one part of the expansive new agenda — from Afghanistan to Indo-Pacific, reforming global economic institutions to addressing climate change, and vaccine diplomacy to governing new technologies that beckon India and the United States.

Conclusion

As they intensify the bilateral cooperation, the two sides will hopefully turn the Indo-US partnership from a perennial curiosity to a quotidian affair.

Foreign Policy Watch: India-United States

Opportunity to expand ties with West

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- Opportunity for India to expand ties with the West

The article takes an overview of the growing convergence of India’s interest with the West in the changing geopolitical scenario and opportunities it offers to India.

Significance of G-7 Summit for India

  • Summit of the G-7, the Group of Seven industrial countries, will be hosted by the United Kingdom this week.
  • Prime Minister Narendra Modi will participate digitally in this summit.
  • This participation also marks an important step towards a new global compact between India and the West.
  • The global financial crisis of 2008, the rapid rise of China, divisions within the West during the Trump years, and the chaotic response in North America and Europe to the Covid-19 pandemic, were the factors that indicated the decline of the West.
  • In his first tour abroad as the US president wants to demonstrate that the collective West is an enduring force to reckon with under renewed American leadership.
  • For India, the G-7 summit is an opportunity to expand the global dimension of India’s growing partnerships with the US and Europe.

Convergence of interests between India and the West

  • The challenges from an increasingly aggressive China, the urgency of mitigating climate change, and the construction of a post-pandemic international order are generating convergence between the interests of India and the West.
  • India’s current engagement with the G-7 is about global issues.
  • The idea of a global democratic coalition that is based more broadly than the geographic West has gained ground in recent years.
  • And India is at the very heart of that Western calculus.
  • For India, too, the G-7summit comes amidst intensifying strategic cooperation with the West.
  • This includes strong bilateral strategic cooperation with the US, France, UK as well as the Quad and the trilateral partnerships with France and Australia as well as Japan and Australia.
  • India has also stepped up its engagement with the European Union.

China factor

  • India’s increasing engagement with the US and the West has been triggered in part by the continuous deterioration of the relationship with China.
  • Besides the threat to territorial security, India finds that its hopes for strong global cooperation with China have taken a big beating in recent years.
  • China is the only great power that does not support India’s permanent membership of the UN Security Council and blocks India’s membership of the Nuclear Suppliers Group.
  • At the end of the Cold War, India believed that China was a natural partner in the construction of a multipolar world.
  • India now can’t escape the conclusion that China is the greatest obstacle to India’s global aspirations and the West is an emerging partner.
  •  India has relied on Western support to fend off China’s effort to internationalise the Kashmir question after the 2019 constitutional changes.
  • India walked away from RCEP due to the growing trade imbalance with China and the negative impact of Chinese imports on India’s domestic manufacturing.
  • After China’s aggression in Ladakh last April, India has also sought to actively limit its exposure to Chinese investments and technology.

Way forward

  • The convergence of interests between India and the West does not mean the two sides will agree on everything.
  •  There are many areas of continuing divergence within the West — from the economic role of the state to the democratic regulation of social media and the technology giants.
  • It will surely not be easy translating the broad convergences between India and the West into tangible cooperation.
  • That would require sustained negotiations on converting shared interests.

Consider the question “The idea of a global democratic coalition that is based more broadly than the geographic West has gained ground in recent years. This offers India an opportunity to expand the global dimension of India’s growing partnerships with the US and Europe. Comment.”

Conclusion

While India continues to strengthen its partnerships in Asia and the global south, a more productive partnership with the West helps secure a growing array of India’s national interests and adds a new depth to India’s international relations.

Foreign Policy Watch: India-United States

US investigation into India’s Digital Services Tax (DST)

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Digital Services Taxes

Mains level : Read the attached story

The US government has announced the further suspension of punitive tariffs for six months on India, Austria, Italy, Spain, Turkey, and the UK while it continues to resolve the DST investigation amid the ongoing multilateral negotiations at the OECD and the G20.

Do you remember?

GAFA tax—named after Google, Apple, Facebook, Amazon—is a proposed digital tax to be levied on large technology and internet companies.

What are the Digital Services Taxes in India?

  • The NDA government had moved an amendment in the Finance Bill 2020-21 imposing a 2 percent digital service tax on trade and services by non-resident e-commerce operators with a turnover of over Rs 2 crore.
  • The new levy has expanded the ambit of the equalization levy for non-resident e-commerce operators involved in the supply of services, including the online sale of goods and provision of services.
  • E-commerce operators are obligated to pay the tax at the end of each quarter.
  • Estimates by the USTR indicate that the value of the DST payable by US-based company groups to India will be up to approximately $55 million per year.

Also read:

What are Digital Services Taxes?

What is the story?

  • The US is focused on finding a multilateral solution to a range of key issues related to international taxation, including our concerns with digital services taxes.
  • It is trying to reaching a consensus on international tax issues through the OECD and G20 processes.

Investigation regarding DST

  • The US has conducted a year-long investigation into digital services taxes imposed by countries, stating that they are against tech companies like Apple, Amazon, Google, and Facebook.
  • It had determined that the digital services taxes adopted by Austria, India, Italy, Spain, Turkey, and the UK has discriminated against US digital companies and were inconsistent with principles of international taxation, and burdened US companies.

What’s the case against India?

  • In the case of India, the USTR’s proposed course of action includes additional tariffs of up to 25 percent ad valorem on an aggregate level of trade.
  • Around 26 categories of goods are in the preliminary list of products that would be subject to the additional tariffs.
  • This includes shrimps, basmati rice, cigarette paper, cultured pearls, semi-precious stones, silver powder and silver articles of jewelry, gold mixed link necklaces, and neck chains, and certain furniture of bentwood.

Why does India need DST?

  • The agenda to reform international tax law so that digital companies are taxed where economic activities are carried is still a work in progress.
  • Due to this, countries are worried that they might cede their right to tax incomes. Therefore, many countries have either proposed or implemented a digital services tax.
  • The proliferation of digital service taxes (DSTs) is a symptom of the changing international economic order.
  • Countries such as India which provides large markets for digital corporations seek a greater right to tax incomes.
  • The taxation of the digitalized economy turned out to be a relatively contentious issue because there is a huge asymmetry in digital service providers and consumers.

Foreign Policy Watch: India-United States

India needs to engage with U.S. progressives

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- India-US relations

The artcle highlights the role played by the progressive section in the US politics in influencing U.S. governments decision on TRIPS waiver and providing aid to India. Incidentally, these progressives include names such as Pramila Jayapal whose comment on human rights violations in Jammu and Kashmir had annoyed India.

What led to change in U.S.’s approach on aid

  • There was a shift in the U.S.’s approach on providing COVID-19-related aid to India as well as on the Trade-Related Aspects of Intellectual Property Rights (TRIPS) waiver on COVID-19 vaccines.
  • It is tempting to surmise the shift as being driven by the Comprehensive Global Strategic Partnership with New Delhi.
  • But it is more than just that.
  • The development was a result of the determined push by some sections of the political and business class, civil society, and Indian Americans.
  • Besides them, the progressives in the Democratic Party made a big difference.

Role of the progressives

  • Days ahead of the May 5 decision of the Biden administration on the TRIPS waiver, 110 members of the U.S. Congress wrote to President Biden urging him to support the waiver.
  • Thus, the Biden administration’s decision on the waiver and the vaccines, characterised as courageous by many, was a result of the push by the progressives.
  • Joining in this effort, the co-chair of the Congressional India Caucus, and over 50 colleagues wrote last week to President Biden seeking supply of specific items.
  • The overall approach is to work with India in its battle against the second wave and prepare for subsequent ones.

Conclusion

It is evident that the progressives have a grip on policymaking. India will have to remain engaged with this section instead of offering a cold shoulder as it did in the recent past. As the adage goes, all politics is local.

Foreign Policy Watch: India-United States

What does US departure from Afghanistan mean for South Asia?

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- US withdrawal from Afghanistan and its implications for the region

The article highlights the important role played by the US in the geopolitics of the region and the impact of the US retreat on the region foreign policy landscape.

How the US shaped the regional politics of South Asia

  • Since it replaced Britain as the major external power in Greater Middle East half a century ago, America has been the pivot around which the regional politics has played out.
  • Many regional actors sought alliances with America to secure themselves against ambitious or troublesome neighbours.
  • Others sought to balance against America.
  • Israel’s security, ensuring oil supplies, competing with other powers, making regional peace, promoting democracy, and stamping out terrorism are no longer compelling factors demanding massive American military, political and diplomatic investments in the region.

Region now has to learn to live with neighbours

  • As America steps back from the Middle East, most regional actors either need alternate patrons or reduced tensions with their neighbours.
  • Although China and Russia have regional ambitions, neither of them bring the kind of strategic heft America brought to bear on the Middle East all these decades.
  • Turkey has figured that its troubled economy can’t sustain the ambitious regional policies.
  •  After years of challenging Saudi leadership of the Islamic world, Erdogan is offering an olive branch to Riyadh.
  • After years of intense mutual hostility, Saudi Arabia and Iran are now exploring means to reduce bilateral tensions and moderate their proxy wars in the region.
  • Saudi Arabia is also trying to heal the rift within the Gulf by ending the earlier effort to isolate Qatar. 
  •  These changes come in the wake of the big moves last year by some Arab states — the UAE, Bahrain, Morocco and Sudan — to normalise ties with Israel.

How India’s approach helped maintain ties in the region

  • India’s emphasis on good relations with all the regional actors without a reference to their conflicts has been vindicated by the turn of events.
  • Barring Turkey, which turned hostile to India under Erdogan, India has managed to expand its ties with most regional actors.
  • Hopefully, the new regional churn will encourage Turkey to take a fresh look at its relations with India.

Effect on India-Pak relations

  • The regional reset in the Middle East has coincided with efforts by Delhi and Rawalpindi to cool their tensions.
  • The ceasefire on the Line of Control in Kashmir announced at the end of February appears to be holding.
  • The US withdrawal from Afghanistan poses major challenges to the Subcontinent.
  • India and Pakistan, for very different reasons, would have liked to see the US forces stay forever in Afghanistan.
  • For India, American military presence would have kept a check on extremist forces and created conducive conditions for an Indian role in Afghanistan.
  • For Pakistan, American military presence in Afghanistan keeps the US utterly dependent on Pakistan for geographic access and operational support.

Challenge of terrorism

  • The prospect of trans-border links between the Taliban and other extremist forces in the region is a challenge that South Asian states will have to confront sooner than later.
  • Soaring levels of violence in Afghanistan and attack on the former president of Maldives, underlines South Asia’s enduring challenges with terrorism.
  • Unless the South Asian states collaborate on countering extremism and terrorism, every one of them will be weakened.

Consider the question “How US troop withdrawal from Afghanistan will influence the regional geopolitics of the region?”

Conclusion

The region needs to focus on the peace and harmony in the region while resolving the bilateral issues through dialogue.

Foreign Policy Watch: India-United States

What patent waiver in the COVID fight mean for global health equity

Note4Students

From UPSC perspective, the following things are important :

Prelims level : TRIPS

Mains level : Paper 2- Implications of patent waiver for Covid-19 vaccine

The article highlights the implications of patent waiver for Covid-19 for global health equity.

Where the opposition to waiver proposal came from

  • Recently, the US agreed to support the India-South Africa proposal, seeking a waiver of patent protection for technologies needed to combat and contain COVID-19.
  • Response to the proposal was divided during earlier debates at the WTO.
  • While many low and middle income countries supported it, resistance came from the U.S., the United Kingdom, the European Union, Switzerland, Australia and Japan.
  • Since the WTO operates on consensus rather than by voting, the proposal did not advance despite drawing support of over 60 countries.
  • Predictably, the pharmaceutical industry fiercely opposed it and vigorously lobbied many governments.
  • Right-wing political groups in the high income countries sided with the industry.

Issues with the reasons given for opposition to the waiver proposal

1) Quality and safety of vaccine production in low and middle-income countries

  • It was argued that the capacity for producing vaccines of assured quality and safety was limited to some laboratories.
  • So, it is argued that it would be hazardous to permit manufacturers in low and middle-income countries.
  • However, pharmaceutical manufacturers have no reservations about contracting industries in those countries to manufacture their patent-protected vaccines for the global market.

2) Licenced manufacturing

  • The counter to patent waiver is an offer to license manufacturers in developing countries while retaining patent rights.
  • This restricts the opportunity for production to a chosen few.
  • The terms of those agreements are opaque and offer no assurance of equity in access to the products at affordable prices, either to the country of manufacture or to other developing countries.

3) Supplying vaccines through COVAX facility

  • It was also stated that developing countries could be supplied vaccines through the COVAX facility, set up by several international agencies and donors.
  • While well-intended, it has fallen far short of promised delivery.
  • Some U.S. states have received more vaccines than entire Africa has from COVAX.

4) No availability of extra capacity for vaccine production

  • Critics of a patent waiver say there is no evidence that extra capacity exists for producing vaccines outside of firms undertaking them now.
  • Even before the change in the U.S.’s position, manufacturers from many countries expressed their readiness and avidly sought opportunities to produce the approved vaccines.
  • They included industries in Canada and South Korea, suggesting that capable manufacturers in high income countries too are ready to avail of patent waivers but are not being allowed to enter a restricted circle.
  • The World Health Organization’s mRNA vaccine technology transfer hub has already drawn interest from over 50 firms.
  • Instead of arguing that capacity is limited, high-income countries and other donors should be supporting the growth of more capacity to meet the current and likely future pandemic.
  • They should learn from the manner in which India built up capacity and gained a reputation as a respected global pharmacy by moving from product patenting to process patenting between 1970 and 2005.

5) Time required to utilise patented technology is long

  • Patent waivers are also dismissed as useless on the grounds that the time taken for their utilisation by new firms will be too long to help combat the present pandemic.
  • But many countries have low vaccination rates and variants are gleefully emerging from unprotected populations.
  • This makes it difficult to put the end date for the pandemic to end

6) China factor

  • An argument put forth by multinational pharmaceutical firms is that a breach in the patent barricade will allow China to steal their technologies, now and in the future.
  • The original genomic sequence was openly shared by China, which gave these firms a head start in developing vaccines.

Issue of rewarding innovation financially

  • Much of the foundational science that built the path for vaccine production came from public-funded universities and research institutes.
  • Further, what use is it to hold on to patents when global health and the global economy are devastated?
  • It is often argued that for defending patent protection, is that innovation and investment by industry need to be financially rewarded to incentivise them to develop new products.
  • Even if compulsory licences are issued bypassing patent restrictions, royalties are paid to the original innovators and patent holders.

Way forward

  • Developing countries must take heart from his gesture and start issuing compulsory licences.
  • The Doha declaration on TRIPS flexibilities permits their use in a public health emergency.
  • High-income countries and multilateral agencies should provide financial and technical support to enable expansion of global production capacity.

Consider the question “Why are the implications of patent waiver for Covid-19 vaccine for the global health equity? What were the reasons for opposition to waiver proposal?” 

Conclusion

The U.S.-supported patent waiver in the COVID fight has the potential to bring in much-needed global health equity.

Foreign Policy Watch: India-United States

Amid concerns in India and Brazil, the unused vaccine stockpile in US

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- Vaccine inequality

Issue of diverting the vaccine stock to India

  • Epidemiologists to industry leaders are urging the Biden administration to release the reserve to countries like India and Brazil, given the assertion that the doses won’t be used in the US.
  • According to Brown University School of Public Health Ashish Jha, the US is “sitting on 35-40 million doses of AstraZeneca vaccine Americans will never use”.
  • In early April, US chief medical adviser Anthony Fauci said the US will likely not need the AstraZeneca shot. 
  • The AstraZeneca vaccine has not been granted Emergency Use Authorization by the US Federal Drug Administration (FDA).
  • With documented cases of blood clots in younger women in Europe correlated with the vaccine, FDA authorisation may be further delayed.

What has the US said in response

  • Co-ordinator of the US Covid-19 taskforce that the Quad partnership and team is providing assistance across government to the country.
  •  He also stated that as their confidence around our supply increases, we will explore the option of exporting the vaccines.

Vaccine inequality

  • According to Bloomberg’s Vaccine Tracker, highest-income countries are vaccinating at a pace 25 times faster than the lowest ones.
  • The US has 22.9% of the world’s vaccines but only 4.3% of the world’s population.
  • China has 21.9% and 18.2% respectively, and India 13.8% and 17.7%, according to the tracker.
  • Almost half of all vaccines have gone to 16% of the world’s population.
  • The Washington Post reported that the world’s poorest 92 countries may not be able to vaccinate even 60% of their population for another three years.
  • India has vaccinated 8% per cent of the population with one dose and 1% with two. Brazil has vaccinated less than 12% with one.

Impact on vaccination in African nations

  • India’s stalled vaccine exports have domino effects on the rollouts in African nations and other developing countries, as Serum’s productions were fuelling efforts globally before India’s second wave.

Foreign Policy Watch: India-United States

Data and a new global order

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- Role of data in shaping the global order

Digital data revolution

  • The Industrial Revolution restructured the global manufacturing order to Asia’s disadvantage.
  • But in the ‘Digital Data Revolution’, algorithms requiring massive amounts of data determine innovation, the nature of productivity growth, and military power.
  • Mobile digital payment interconnections impact society and the international system, having three strategic implications.

3 implications of mobile digital payment interconnections

1) Symbiotic nature of military and civilian system

  • Because of the nature and pervasiveness of digital data, military and civilian systems are symbiotic.
  • Cybersecurity is national security, and this requires both a new military doctrine and a diplomatic framework.

2) Productivity advantage of data to Asia

  • The blurring of distinctions between domestic and foreign policy and the replacement of global rules with issue-based understanding converge with the growth of smartphone-based e-commerce, which ensures that massive amounts of data give a sustained productivity advantage to Asia.

3) India can negotiate new rules as an equal with US and China

  • Data streams are now at the centre of global trade and countries’ economic and national power.
  • India, thus, has the capacity to negotiate new rules as an equal with the U.S. and China.

How data shaped US-China relations

  • Innovation based on data streams has contributed to China’s rise as the second-largest economy and the “near-peer” of the U.S.
  • The national security strategy of the U.S. puts more emphasis on diplomacy than military power to resolve conflicts with China, acknowledging that its military allies have complex relationships with Beijing, as it seeks to work with them to close technology gaps.
  • China’s technology weakness is the dependence on semiconductors and its powerlessness against U.S. sanctions on banks, 5G and cloud computing companies.
  • But China’s digital technology-led capitalism is moving fast to utilise the economic potential of data, pushing the recently launched e-yuan and shaking the dollar-based settlement for global trade.

How global strategic balance will be shaped by data standard

  • China has a $53-trillion mobile payments market and it is the global leader in the online transactions arena, controlling over 50% of the global market value.
  • India’s Unified Payments Interface (UPI) volume is expected to cross $1 trillion by 2025.
  • The U.S., in contrast, lags behind, with only around 30% of consumers using digital means and with the total volume of mobile payments less than $100 billion.
  • The global strategic balance will depend on new data standards.
  • The U.S., far behind in mobile payments, is falling back on data alliances and sanctions to maintain its global position.

India’s role in digital economy

  • With Asia at the centre of the world, major powers see value in relationships with New Delhi.
  • India fits into the U.S. frame to provide leverage.
  • China wants India, also a digital power, to see it as a partner, not a rival.
  • And China remains the largest trading partner of both the U.S. and India despite sanctions and border skirmishes.

Way forward for India

  • India, like China, is uncomfortable with treating Western values as universal values and with the U.S. interpretation of Freedom of Navigation rules in others’ territorial waters.
  • New Delhi’s Indo-Pacific vision is premised on “ASEAN centrality and the common pursuit of prosperity”.
  • The European Union recently acknowledged that the path to its future is through an enhanced influence in the Indo-Pacific, while stressing that the strategy is not “anti-China”.
  • The U.S. position in trade, that investment creates new markets, makes it similar to China’s Belt and Road Initiative.

Conclusion

India alone straddles both U.S. and China-led strategic groupings, providing an equity-based perspective to competing visions. It must be prepared to play a key role in moulding rules for the hyper-connected world, facing off both the U.S. and China to realise its potential of becoming the second-largest economy.

Foreign Policy Watch: India-United States

India as a country of Particular concern: USCIRF

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- India-US relations

About USCIRF

  • U.S. Commission on International Religious Freedom (USCIRF) is an independent bi-partisan commission.
  • USCIRF recommendations are non-binding.
  • The Trump administration had rejected the USCIRF recommendation to designate India a CPC last year.
  • Last year India had denied visas to members of USCIRF who wanted to visit India for their assessment.

What are the key concerns of the report

  • The key concerns of the 2021 report include the Citizenship Amendment Act.
  • On the National Register of Citizens (NRC), the report says, “The consequences of exclusion – as exemplified by a large detention camp being built in Assam – are potentially devastating…”
  • Efforts to prohibit interfaith marriage – such as those in Uttar Pradesh and Madhya Pradesh – are also highlighted as a concern.
  • In an apparent reference to the Tablighi Jamaat Markaz in March 2020, the USCIRF says that at the beginning of the COVID-19 pandemic, disinformation and hateful rhetoric often targeted religious minorities.

Recommendations of the report to the US Congress

  • The USCISRF recommended that the administration impose targeted sanctions on Indian individuals and entities for ‘severe violations of religious freedom’.
  • A second recommendation was for the administration to promote inter-faith dialogue and the rights of all communities at bilateral and multilateral forums “such as the ministerial of the  Quad].
  • Another recommendation – to the U.S. Congress – was to raise issues in the U.S. – India bilateral space, such as by hosting hearings, writing letters and constituting Congressional delegations.

Foreign Policy Watch: India-United States

US Treasury keeps India on currency watch list

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Currency Manipulation

Mains level : Impact of Currency Manipulation

India is one of the 11 countries on the US Treasury’s ‘Monitoring List’ with regard to their currency practices for the first time in the Biden administration.

What is Currency Manipulation?

  • Currency manipulation refers to actions taken by governments to change the value of their currencies relative to other currencies in order to bring about some desirable objective.
  • The typical claim – often doubtful – is that countries manipulate their currencies in order to make their exports effectively cheaper on the world market and in turn make imports more expensive.

Why do countries manipulate their currencies?

  • In general, countries prefer their currency to be weak because it makes them more competitive on the international trade front.
  • A lower currency makes a country’s exports more attractive because they are cheaper on the international market.
  • For example, a weak Rupee makes Indian exports less expensive for offshore buyers.
  • Secondly, by boosting exports, a country can use a lower currency to shrink its trade deficit.
  • Finally, a weaker currency alleviates pressure on a country’s sovereign debt obligations.
  • After issuing offshore debt, a country will make payments, and as these payments are denominated in the offshore currency, a weak local currency effectively decreases these debt payments.

US treasury’s criteria

To be labelled a manipulator by the U.S. Treasury:

  • Countries must at least have a $20 billion-plus bilateral trade surplus with the US
  • foreign currency intervention exceeding 2% of GDP and a global current account surplus exceeding 2% of GDP

Implications for India

  • India has traditionally tried to balance between preventing excess currency appreciation on the one hand and protecting domestic financial stability on the other.
  • India being on the watch list could restrict the RBI in the foreign exchange operations it needs to pursue to protect financial stability.
  • This comes when global capital flows threaten to overwhelm domestic monetary policy.
  • The two most obvious consequences could be an appreciating rupee as well as excess liquidity that messes with the interest rate policy of the RBI.
  • Indian policymakers have to be sensitive to the unpredictable nature of policy-making in the US under Trump, especially concerning global trade.

Foreign Policy Watch: India-United States

Navigation with permission

Note4Students

From UPSC perspective, the following things are important :

Prelims level : UNCLOS

Mains level : Paper 2- Understanding the rights of the coastal state under UNCLOS

The explains the issues involved in the recent incident in which US position on freedom of navigation under UNCLOS differed from India’s.

Different positions

  • On April 7, the U.S.’s 7th Fleet Destroyer conducted a ‘Freedom of Navigation Operation’ inside India’s Exclusive Economic Zone (EEZ).
  • This exercise was conducted without requesting India’s consent.
  • Moreover, the U.S. 7th Fleet noted in its press release that India’s requirement of prior consent is “inconsistent with international law”.
  • However, India asserted that the UN Convention on the Law of the Sea (UNCLOS) “does not authorize other States to carry out in the Exclusive Economic Zone and on the continental shelf, military exercises or manoeuvres, in particular those involving the use of weapons or explosives, without the consent of the coastal state”. 
  • The question is, can countries carry out military exercises in another country’s EEZ and if yes, subject to what conditions?

UNCLOS Provisions for EEZ

  • UN Convention on the Law of the Sea (UNCLOS) binds all its signatories and customary international law binds all states, subject to exceptions like the doctrine of persistent objector.
  • As per the UNCLOS, EEZ is an area adjacent to the territorial waters of a coastal state.
  • Under UNCLOS, a sovereign coastal state has rights and duties relating to management of natural resources; establishment and use of artificial islands, installations and structures; marine scientific research; and protection of the marine environment.
  • India is a party to the UNCLOS while the U.S. is not.
  • Article 87 provides for freedom of the high seas under which all states have the freedom of navigation. 
  • Apart from that, states enjoy the freedom of overflight and of the laying of submarine cables and pipelines as well as other internationally lawful uses of the sea.
  •  However, the freedom of navigation is subject to the conditions laid down under the UNCLOS and other rules of international law.
  • In addition to it, Article 58 (3) stipulates another qualification: “In exercising their rights and performing their duties under this Convention in the exclusive economic zone, States shall have due regard to the rights and duties of the coastal State and shall comply with the laws and regulations adopted by the coastal State…”.

So, what laws and regulation are adopted by India under Article 58 (3) of UNCLOS

  • The relevant Indian law in this regard is the Territorial Waters, Continental Shelf, Exclusive Economic Zone and Other Maritime Zones of India Act, 1976.
  • Section 7 sub-section 9 of this Act recognises the freedom of navigation of the ships of all States but makes them subject to the exercise of rights by India within the zone.
  • Article 310 of the UNCLOS does permit states to make declarations in order to explain the relationship between the Convention and their own laws.
  • The declaration by India in 1995 also states that India “understands that the provisions of the Convention do not authorize other States to carry out in the exclusive economic zone and on the continental shelf military exercises or manoeuvres.

Way forward

  • Non-consensual military activities that hinder the lawful enjoyment of rights of coastal states need not be permissible.
  • Also, a coastal state is naturally concerned about military exercises and manoeuvres posing a risk to its coastal communities, its installations or artificial islands, as well as the marine environment.
  • Thus, any state which wishes to conduct such exercises must do so only in consultation with the coastal state since the coastal state is the best judge of its EEZ.
  • Both India and the U.S. should negotiate such concerns for the maintenance of international peace and security.

Consider the question “What are the rights of coastal state on its Exclusive Economic Zone under UNCLOS? “

Conclusion

On a conjoint reading of Articles 58, 87 and 310, it can be argued that freedom of navigation cannot be read in an absolute and isolated manner.

Foreign Policy Watch: India-United States

India and the great power triangle of Russia, China and US

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- Russia-China-US dynamic and its impact on India

Relations between Russia, China and the US have not always been the same. The changes in triangular dynamic offers lessons for India. The article deals with this issue.

India’s changing relations with great powers

  • The recent visit of Russian foreign minister Sergei Lavrov to Delhi and Islamabad is among multiple signs of India’s changing relations with the great powers.
  •  At the same time, Delhi’s growing strategic partnerships with the US and Europe have begun to end India’s prolonged alienation from the West.
  • Also, New Delhi’s own relative weight in the international system continues to increase and give greater breadth and depth to India’s foreign policy.

Shifts in triangular relations between Russia, China and America

1) Russia-China relations

  • The leaders of Russia and China — Joseph Stalin and Mao Zedong — signed a formal treaty of alliance in 1950.
  •  Russia invested massively in the economic modernisation of China, and also gave it the technology to become a nuclear weapon power.
  • However, by the 1960s, their relations soured and two were arguing about ideology and a lot else.
  • The Sino-Soviet split had consequences way beyond their bilateral relations.
  • None of them more important than the efforts by both Moscow and Beijing to woo Washington.
  • The break-up between Russia and China also opened space for Delhi against Beijing after the 1962 war in the Himalayas.
  • Under intense American pressure on Russia in the 1980s, Moscow sought to normalise ties with Beijing.
  • Stepping back to the 1960s and 1970s, China strongly objected to Delhi’s partnership with Moscow.

2) Russia-US relations

  • Russia, which today resents India’s growing strategic warmth with the US, has its own long history of collaboration with Washington.
  • Moscow and Washington laid the foundations for nuclear arms control and sought to develop a new framework for shared global leadership.
  • But Delhi was especially concerned about the Nuclear Nonproliferation Treaty system, with all its constraints on India’s atomic options, that Moscow and Washington constructed in the late 1960s.

3) US-China relations

  • Despite fighting Korean War with the US in the early 1950s, China normalised relations with the U.S. in 1971 to counter the perceived threat from Russia.
  • Deng Xiaoping, refused to extend the 1950 security treaty with Russia that expired in 1980.
  • China turned instead, towards building a solid economic partnership with the US and the West that helped accelerate China’s rise as a great power.

Lessons for India

  • The twists and turns in the triangular dynamic between America, Russia and China noted above should remind us that Moscow and Beijing are not going to be “best friends forever”.
  • India has no reason to rule out important changes in the way the US, Russia and China relate to each other in the near and medium-term.
  • In the last few years, India has finally overcome its historic hesitations in partnering with the US.
  • India has also intensified its efforts to engage European powers, especially France.
  • Prime Minister Boris Johnson’s visit to India later this month promises a fresh start in India’s difficult postcolonial ties with Britain.
  • India is also expanding its ties with Asian middle powers like Japan, Korea and Australia.
  • Despite the current differences over Afghanistan and the Indo-Pacific, India and Russia have no reason to throw away their mutually beneficial bilateral partnership.
  • The current troubles with China seem to be an unfortunate exception to the upswing in India’s bilateral ties with global actors.

Consider the question “What are the lessons India can draw from the  twists and turns in the triangular dynamic between America, Russia and China.”

Conclusion

India has successfully managed the past flux in the great power politics; it is even better positioned today to deal with potential changes among the great powers.

Foreign Policy Watch: India-United States

7th Fleet’s patrol in India’s EEZ was an act of impropriety

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Maritime zones under UNCLOS

Mains level : Paper 2- Issues with UNCLOS 1982

The explains the implications of a recent incident in which the US 7th fleet asserted navigation freedom and rights inside India’s Exclusive Economic Zone.

Freedom of navigation operation in India’s EEZ

  • The US 7th fleet recently declared that on 7th April, 2021 USS John Paul Jones asserted navigational rights and freedom inside India’s EEZ, without requesting India’s prior consent.
  • The statement also said that  “India requires prior consent for military exercises or manoeuvres in its EEZ, a claim inconsistent with international law.

Which international law the statement referred to

  • The “international law” being cited by Commander 7th Fleet is a UN Convention which resulted from the third UN Conference on Law of the Seas (UNCLOS 1982).
  • India has ratified the Convention, which came into force in 1994.
  • However, amongst the 168 nations who have either acceded to or ratified UNCLOS 1982, the US is conspicuous by its absence.

Background of the UNCLOS

  • In 1945, the US unilaterally declared its jurisdiction over all natural resources on that nation’s continental shelf. 
  • Taking cue from the US, some states extended their sovereign rights to 200 miles, while others declared territorial limits as they pleased.
  • To bring order to a confusing situation, conferences for codifying laws of the seas were convened by the UN.
  • After negotiations, an agreement was obtained on a set of laws that formalised the following maritime zones:
  • (a) A 12-mile limit on territorial sea;
  • (b) A 24-mile contiguous zone.
  • (c) Amnewly conceived “exclusive economic zone” (EEZ) extending up to 200 miles within which the state would have sole rights over natural resources.
  • The EEZ was said to be unique in that it was neither high seas nor territorial waters.

Issues with the UNCLOS 1982

  • The signatories UNCLOS 1982 have chosen to remain silent on controversial issues with military or security implications and mandated no process for resolution of ambiguities.
  • Resort to the International Tribunal for the Law of the Sea or a Court of Arbitration are amongst the options available.
  • However, many states have expressed a preference for “negotiating in good faith”.
  • The time has, perhaps, come for signatories of UNCLOS 1982 to convene another conference to review laws and resolve issues of contention.

Why US refused to ratify UNCLOS

  • It was accepted that the seabed beyond the limits of national jurisdiction was not subject to national sovereignty but would be “the common heritage of mankind” .
  • This seems to have been at the root of the US opposition to UNCLOS.
  • It was felt in the US that this concept favoured the under-developed countries thereby denying America the fruits of its technological superiority.
  • The US Senate, therefore, refused to ratify UNCLOS.
  • Amongst the areas of major contention or sharp divergence in the interpretation of rules are:
  • 1) Applicability of the EEZ concept to rocks and islets.
  • 2) The right of innocent passage for foreign warships through territorial seas.
  • 3) Conduct of naval activities in the EEZ and the pursuit of marine scientific research in territorial waters and EEZ.

Containing China

  • China has insulated itself against US intervention, through the progressive development of its “anti-access, area-denial” or A2AD capability.
  • China has accelerated its campaign to achieve control of the South China Sea (SCS).
  • In 2013, China commenced on an intense campaign to build artificial islands in the SCS on top of reefs in the Spratly and Paracel groups.
  • In 2016, China disdainfully rejected the verdict of the UN Court of Arbitration in its dispute with the Philippines.
  • So far, none of the US initiatives including Obama’s abortive US Pivot/Re-balance to Asia, Trump’s Indo-Pacific Strategy and Asia Reassurance Initiative Act, seem to have had the slightest impact on China’s aggressive intent
  • Therefore, it seems pointless for the US Navy to frighten the Maldives or friendly India and it needs to focus on China instead.

Consider the question “What are the different types of maritime zones under the United Nations Convention for the Law of the Sea 1982? What are the flaws in the convention?

Conclusion

In this fraught environment, the ever-expanding, worldwide FONOP campaign needs a careful reappraisal by US policy-makers for effectiveness — lest it alienates friends instead of deterring adversaries.

Foreign Policy Watch: India-United States

Freedom of Navigation Operations

Note4Students

From UPSC perspective, the following things are important :

Prelims level : FONOP

Mains level : Freedom of navigation issues

The US Navy has had “asserted navigational rights and freedoms approximately 130 nautical miles west of Lakshadweep Islands, inside India’s exclusive economic zone (EEZ), without requesting India’s prior consent, consistent with international law”.

Try this question:

Q.What do you mean by Freedom of Navigation Operations (FONOPs)? What are its legal backings?  Discuss its significance.

Freedom of Navigation Operations

  • FONOPs are closely linked to the concept of freedom of navigation, and in particular to the enforcement of relevant international law and customs regarding freedom of navigation.
  • It involves passage conducted by the US Navy through waters claimed by coastal nations as their exclusive territory.
  • It is carried under the US policy of exercising and asserting its navigation and overflight rights and freedoms around the world”.
  • It says these “assertions communicate that the US does not acquiesce to the excessive maritime claims of other nations, and thus prevents those claims from becoming accepted in international law”.

Significance of FONOPs

  • FONOPs are a method of enforcing UNCLOS (United Nations Convention on the Law of the Sea) and avoiding these negative outcomes by reinforcing freedom of navigation through practice.
  • It is exercised by sailing through all areas of the sea permitted under UNCLOS, and particularly those areas that states have attempted to close off to free navigation as defined under UNCLOS.

What about EEZs?

  • An exclusive economic zone (EEZ) is prescribed by the 1982 United Nations Convention on the Law of the Sea.
  • It is an area of the sea in which a sovereign state has special rights regarding the exploration and use of marine resources, including energy production from water and wind.
  • It stretches from the baseline out to 200 nautical miles from the coast of the state in question.
  • It is also referred to as a maritime continental margin and, in colloquial usage, may include the continental shelf.
  • The term does not include either the territorial sea or the continental shelf beyond the 200 nautical mile limit.
  • The difference between the territorial sea and the exclusive economic zone is that the first confers full sovereignty over the waters, whereas the second is merely a “sovereign right” which refers to the coastal state’s rights below the surface of the sea.
  • The surface waters, as can be seen on the map, are international waters.

Is FONOP violative of India’s EEZ?

  • As per India’s Territorial Waters Act, 1976, the EEZ of India “is an area beyond and adjacent to the territorial waters, and the limit of such zone is two hundred nautical miles from the baseline”.
  • India’s “limit of the territorial waters is the line every point of which is at a distance of twelve nautical miles from the nearest point of the appropriate baseline”.
  • Under the 1976 law, “all foreign ships (other than warships including submarines and other underwater vehicles) shall enjoy the right of innocent passage through the territorial waters”.

Back2Basics: UNCLOS

  • The Law of the Sea Treaty formally known as the Third United Nations Convention on the Law of the Sea was adopted in 1982 at Montego Bay, Jamaica. It entered into force in 1994.
  • The convention establishes a comprehensive set of rules governing the oceans and replaces previous U.N. Conventions on the Law of the Sea
  • The convention defines the distance of 12 nautical miles from the baseline as Territorial Sea limit and a distance of 200 nautical miles distance as Exclusive Economic Zone limit.

Foreign Policy Watch: India-United States

Ukraine urges NATO to speed up membership

Note4Students

From UPSC perspective, the following things are important :

Prelims level : NATO

Mains level : Relevance of NATO

Ukrainian President has urged NATO to speed up his country’s membership in the alliance, saying it was the only way to end fighting with pro-Russia separatists.

North Atlantic Treaty Organization (NATO)

  • The NATO, also called the North Atlantic Alliance, is an intergovernmental military alliance between 30 European and North American countries.
  • The organization implements the North Atlantic Treaty that was signed on 4 April 1949.
  • NATO constitutes a system of collective defence whereby its independent member states agree to mutual defence in response to an attack by any external party.
  • NATO’s Headquarters are located in Haren, Brussels, Belgium, while the headquarters of Allied Command Operations is near Mons, Belgium.

Its members

  • Since its founding, the admission of new member states has increased the alliance from the original 12 countries to 30.
  • The most recent member state to be added to NATO was North Macedonia on 27 March 2020.
  • NATO currently recognizes Bosnia and Herzegovina, Georgia, and Ukraine as aspiring members.
  • An additional 20 countries participate in NATO’s Partnership for Peace program, with 15 other countries involved in institutionalized dialogue programs.

Why NATO matters?

  • The combined military spending of all NATO members constitutes over 70% of the global nominal total.
  • Members agreed that their aim is to reach or maintain the target defence spending of at least 2% of their GDP by 2024.

Also read:

Why engagement with NATO should be part of India’s new European orientation

Foreign Policy Watch: India-United States

US foreign policy has changed, India can’t bank on being its ‘ally’ anymore

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- Changes in U.S. foreign policy

The article highlights the paradigm shift in the U.S. foreign policy in which the U.S. engages with a country on several parallel lines with little or no scope for a trade-off between them.

Changes in the U.S. foreign policy

  •  US foreign policy is no longer based on old friend-or-foe classification under which transgressions by a “friend” or an “ally” were overlooked if the country was helpful to US self-interests.
  • Instead, the US foreign policy paradigm has shifted to one where a country’s position on an issue — trade, climate change, security, or human rights — is the categorising principle and not the country.
  • Put differently, engagement with countries will be done on issues with little or no trade-off among them.
  • Competition, cooperation, and confrontation can all characterise the US’s bilateral engagement depending on the specific issue.
  • For example, trade will involve competition while climate change and pandemics will necessitate cooperation.
  • Human rights and national security issues could be confrontational.

Smart sanctions

  • A key instrument of foreign policy will be the now well-honed system of “smart” sanctions.
  • Sanctions in the past were directed at a country as a whole but such sanctions were counterproductive and created anti-US sentiment.
  • In its latest version, smart sanctions do not target countries, but specific individuals, firms, and institutions for a variety of alleged transgressions.
  • US businesses and individuals cannot transact with sanctioned entities.
  • The Magnitsky Accountability Act of 2012, for example, targeted those involved in the death of Russian lawyer Sergei Magnitsky and others responsible for human rights abuses in Russia.
  • When this was found to be successful, an executive order, passed in 2017, extended the provisions in the Magnitsky Act, to all who are corrupt or violate human rights in the world.

What does this mean for India

  • Unlike in the antiquated rational-actor paradigm where there are imagined trade-offs across issues, in the new framework the US engages with countries on parallel lines.
  • The engagement is multifaceted across trade, intellectual property rights, climate change, security, terrorism, and, importantly, human rights, with limited trade-off across them.
  • Whether cooperation, competition, or confrontation dominate the nature of the engagement will depend on the specifics not whether India is a friend or a foe.

Conclusion

This marks the shift in the U.S. foreign policy, if others, including India, do not adapt to this paradigm shift, then they will find engagement with the US starkly different and surprisingly difficult.

Foreign Policy Watch: India-United States

A robust economic relationship between India and U.S.

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Generalised System of Preferences

Mains level : Paper 2- Trade ties between India-U.S.

The article outlines the potential for India-U.S. collaboration in certain ares of trade which will bring many gains.

India-U.S. bilateral trade

  • In the five years to 2019, bilateral trade grew at a CAGR of 7.7% per year to $146 billion.
  • If we assume the same rate of growth, the $500 billion target will be achieved by 2036.
  • To ensure this, the CAGR would need to be set at 11.9%.
  • This is doable if the right policy actions are taken.

Areas of collaboration

1) Healthcare exchanges

  • A collaborative response to the pandemic would contribute to global containment of the virus.
  • Business partnerships are already taking place in the supply chain.
  • As India becomes the hub of global vaccine distribution, building confidence in the Indian IPR regime, reviving the U.S.-India Health Dialogue, and mutually recognising standards and approvals will help drive healthcare exchanges.

2) Improving the macro trade architecture

  • The macro trade architecture can be strengthened with a broad trade agreement focusing on resolving the low-hanging fruit.
  • The U.S.-India Trade Policy Forum meetings can be revived along with a cross-sector track-2 group to look at convergence on issues such as market access.
  • There is potential for flexibility from both sides for restoring the Generalised System of Preferences.
  • The two countries should consider initiating discussions on a free trade agreement.

3) Trade in services

  • Recent regulations in the U.S. have impacted labour mobility which can be addressed through immigration reforms for employment-based visa backlogs and smooth and timely processes.
  • The MoU on labour cooperation signed in 2011 could be updated in line with India’s recent labour regulatory changes.
  • This may also be a good time to reconsider a totalisation agreement pertaining to social security, given that both have already entered into such agreements with many of the same partner countries.

4) Defence industry ties

  • Defence industry ties can be stepped up in coordination with industry.
  • A defence dialogue including the private sectors of both sides could help in co-production and co-development in the defence and aerospace sectors.

5) Stepping up engagement of SMEs

  • Five, engagement of small and medium enterprises (SMEs) can be stepped up.
  • Smaller U.S. companies can find significant new opportunities for investments in India and sourcing from India.
  • A U.S.-India SME CEOs Forum can be set up to catalyse such partnerships.

6) Clean energy and climate change

  • The U.S.-India Strategic Energy Partnership should be geared towards joint investments in industrial decarbonisation, carbon dioxide removal and green hydrogen.
  • The programmes of Partnership to Advance Clean Energy Research, Partnership to Advance Clean Energy Deployment and Promoting Energy Access through Clean Energy must be relaunched.

7) Digital economy partnership

  • India has proved its ability in this space with new opportunities opening up in robotics, space, AI and electric vehicles.
  • It is also important to disseminate information on India’s IPR regime improvements and work towards taking India off the U.S. Trade Representative IPR priority watchlist.

8) Other areas

  • Other opportunities in the bilateral economic relationship include education, innovation and R&D, and agricultural trade and technology.

Conclusion

A closer economic partnership would bring gains to both sides in terms of GDP, employment, and productivity, given the complementary natures of their economies.

Foreign Policy Watch: India-United States

The Quad’s importance to India’s strategic autonomy

Note4Students

From UPSC perspective, the following things are important :

Prelims level : SCO

Mains level : Paper 3- Changing context of India's strategic autonomy

India is a member of both the Quad and the BRICS. Is not it the contradiction? The article answers this question and maps the transformation of India’s relation with the U.S. over the years.

Is India’s participation in BRICS and Quad contradictory?

  • Global Times, the Chinese newspaper last week speculating on the implications of the historic Quad summit for the BRICS.
  • In calling the Quad a “negative asset” for the BRICS the Global Times was highlighting what it sees as a contradiction in India’s participation in both the forums.
  • The paper argues that India has worsened “India-China and India-Russia relations” and halted progress “in the development of BRICS and SCO”.
  • Global Times warns that if India continues to get closer to Washington, India “will eventually lose its strategic autonomy”.

Understanding India’s strategic autonomy

  • “Strategic autonomy” is the framework that guided Delhi’s international relations since the Cold War.
  • In the early 1990s, strategic autonomy was about creating space for India against the overweening American power.
  • Why the space was needed? It was mainly because of the U.S. stance on two important aspects: Kashmir issue and nuclear program.
  • President Bill Clinton had questioned the legitimacy of Jammu and Kashmir’s accession to India and declared the US’s intent to resolve Delhi’s Kashmir dispute with Pakistan.
  • Washington insisted that rolling back India’s nuclear and missile programmes was a major objective of US foreign policy.
  • All that changed over the last three decades.

8 elements of  transformation of India’s relations with the U.S and China

  • A rising China has emerged as the biggest challenge to India and the US is increasingly an important part of the answer.
  • A few elements stand out.
  • First, China has become more assertive on the contested boundary, therefore, the support from the US and its Asian allies has been valuable.
  • Second, on the Kashmir question, China raises the issue at the UNSC while the US is helping India to block China’s moves.
  • Third, on cross-border terrorism, the US puts pressure on Pakistan and China protects Rawalpindi.
  • Fourth, the US has facilitated India’s integration with the global nuclear order while Beijing blocks Delhi’s membership of the Nuclear Suppliers Group.
  • Fifth, the US backs India’s permanent membership of the UNSC, China does not.
  • Sixth, India now sees the trade with China hollowing out India’s manufacturing capability.
  • Its objective on diversifying its economy away from China is shared by the US and the Quad partners.
  • Seventh, India opposes China’s Belt and Road Initiative as a project that undermines India’s territorial sovereignty and regional primacy.
  • India is working with Quad partners to offer alternatives to the BRI.
  • Finally, India sees China’s rising military profile in the subcontinent and the Indian Ocean as a problem and is working with Washington to redress the unfolding imbalance in India’s neighbourhood.

India’s approach to BRICS and SCO

  • The BRICS was part of India’s strategy in the unipolar moment that dawned at the end of the Cold War.
  • India’s current enthusiasm for the Quad is about limiting the dangers of a unipolar Asia dominated by China.
  • But India will continue to attach some value — diplomatic if not strategic — to a forum like the BRICS.
  • After all, the BRICS forum provides a useful channel of communication between Delhi and Beijing at a very difficult moment in the evolution of their bilateral relations.
  • The BRICS is also about India’s enduring partnerships with Russia, Brazil, and South Africa.
  • India also values its ties with the Central Asian states in the SCO.
  • The BRICS could certainly become a productive forum someday — when Delhi and Beijing mitigate their multiple contentions.

Consider the question “A rising China has emerged as the biggest challenge to India and the US is increasingly an important part of the answer. Examine the elements that support this underlying transformation of India’s relationship with the two countries.”

Conclusion

No amount of words in a BRICS declaration can hide the sharpening contradictions between India and China today. The absence of joint statements did not mask the growing strategic congruence among the Quad nations in recent years.

Foreign Policy Watch: India-United States

Why does the deepening Indo-US friendship puzzle so many?

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- India-US relations

The India-US ties have advanced by leaps and bounds. Yet, there is a persistent underestimation of India’s capacity to rework its great power relations. The article deals with this issue.

Expanding partnership

  • India-US relations have been on a steady upward trajectory over the last three decades.
  • This partnership withstood significant political transitions in both countries and managed to overcome many difficult barriers.
  • The US is now India’s most comprehensive partner.
  • The Russia relationship is long on defence but short on commerce.
  • India’s commercial ties with China are large, but tilted heavily in Beijing’s favour.
  • Collective Europe is big on commerce but small on security cooperation.
  • The US has a sizeable presence in both economic and security dimensions and the political common ground with India has steadily expanded.

So, why persistent doubt in India about the US partnership

  • One part of it is the ingrained ideological bias in the dominant foreign policy elite.
  • Delhi’s stilted debate on the US is, unfortunately, reinforced by the sad absence of investment in institutional capabilities to study American politics, economics and international relations.

Issues with our assessment of relations with India

  • There is an enduring reluctance of India’s foreign policy community to either acknowledge or accept the unfolding transformation of India’s ties with the US.
  • There is also continuing underestimation of India’s capacity to rework its great power relations to meet India’s changing interests and circumstances.
  • It was widely held that the Indo-Pacific and the Quad will become footnotes in Biden’s foreign policy.
  • This in turn was based on the bet that Biden is likely to embrace China rather than confront it in the manner that Trump did.
  • All these assumptions turned out to be inaccurate.
  • Concern for democracy and human rights has always been part of US foreign policy ideology.
  • But no state, not even a revolutionary one, can run its foreign policy on a single-point agenda. 

Underestimating India’s agency to shape the partnership

  • Even as it continuously misjudged the US, the Indian foreign policy elite has not appreciated India’s agency to shape the relationship with America.
  • The conviction that Delhi is perennially under US pressure to accept policies harmful for itself further distorts the discourse in the media and among the chattering classes.
  • The evidence from the 1990s — one of India’s most vulnerable moments after Independence — should have corrected this misperception.
  • The traditional discourse finds it hard to come to terms with the twin factors shaping India’s new approach.
  • One is the significant increase in India’s material capabilities.
  • India’s aggregate GDP increased ten-fold between 1990 ($270 billion) and 2020 (about $2,700 billion).
  • Equally important is the new political will in Delhi.

Consider the question “There is a continuing underestimation of Delhi’s capacity to rework its great power relations with the US to meet India’s changing interests and circumstances. Critically examine.” 

Conclusion

The new India no longer wrings its hands in dealing with the US; it relishes the large room for strategic bargaining with America. Even more important, Delhi is no longer a reluctant partner to Washington.

Foreign Policy Watch: India-United States

US-Russia to extend New START Treaty

Note4Students

From UPSC perspective, the following things are important :

Prelims level : OST, INF Treaty, New START policy

Mains level : US-Russia power tussle

The Russian lower house of Parliament, the Duma has ratified a new START nuclear treaty with the US.  Both countries had “agreed in principle” to extend the arms treaty by five years with Joe Biden swearing-in.

The New START, INF and the Open Skies …. Be clear about the differences of these treaties. For example- to check if their inception was during cold war era etc.

New START Treaty

  • The New Strategic Arms Reduction Treaty (New START) pact limits the number of deployed nuclear warheads, missiles and bombers and is due to expire in 2021 unless renewed.
  • The treaty limits the US and Russia to a maximum of 1,550 deployed nuclear warheads and 700 deployed missiles and bombers, well below Cold War caps.
  • It was signed in 2010 by former US President Barack Obama and then-Russian President Dmitry Medvedev.
  • It is one of the key controls on the superpower deployment of nuclear weapons.

A reset to Trumps policies

  • In February 2020, the US withdrew from the 1987 Intermediate-Range Nuclear Forces Treaty (INF), accusing Moscow of violating the agreement.
  • Russian then had proposed a one-year extension without conditions of the last major nuclear arms reduction accord, the New START Treaty between Russia and the U.S.
  • If it had fallen, it could have been the second nuclear weapons treaty to collapse under the leadership of Trump.

Foreign Policy Watch: India-United States

New horizon of India-U.S. ties

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- India-U.S. relations and area of cooperation

The article explores the area of cooperation for India and the U.S. under a new administration in U.S. amid changing geopolitical realities.

China: Shared cause of concern

  • The Biden administration’s approach to India will be shaped by its position towards China.
  • There is a bipartisan change in the US’s attitude to China.
  • The Biden administration will continue Trump administrations trade policy- reducing the trade deficit, ensuring a level-playing field, keeping a keen eye on technology rivalry etc.
  • There are parallels in the concerns of India and the U.S. — invigorating the domestic economy and dealing with a rising rival.
  • These concerns can translate into opportunities for both countries.

How India and U.S can convert concerns into opportunities

1) Cooperation in healthcare

  • Healthcare is clearly an area that India can play up in bilateral relations.
  • The two countries can also work with multilateral agencies across the spectrum of vaccine (including Covid vaccine) development, logistics and distribution.
  • India produces around 20 per cent of the global requirement for generic drugs by volume and every third tablet of generics consumed in the US.
  • The President-elect has indicated his commitment to providing better and affordable healthcare
  • This could be an opportunity for the Indian pharma sector to play a role in reducing health costs of the American consumer.
  • India can benefit from advancements in medical technologies, devices, new medicines and R&D capabilities, presenting opportunities for American companies.

2) Job creation through trade and exports

  • Biden has set an ambitious target for US-India trade.
  • Businesses in both countries are also looking for diversifying their manufacturing supply chains.
  • This portends well for the creation of employment in manufacturing.
  • An area where strategic considerations and imperatives of job creation converge is defence, especially since India has been designated a Major Defence Partner of the US.

3) Focus on infrastructure in both countries

  • For the US, this can mean opportunities in India in transportation, power and other urban amenities.
  • The US’s renewed focus on climate change should lead to greater cooperation with India in energy-related areas.
  • Cooperation in energy-related areas includes more efficient energy dissemination and management (such as smart grids) to renewable energy technologies.

4) Enhance opportunities in 5G tech

  • There is potential to enhance mutual opportunities in the 5G tech sector.
  • Increased partnership between the two nations can accelerate the development of technology solutions, promote vendors in the 5G open ecosystem and drive economic growth.
  • The two countries should engage in shaping the rules of a new order in this space.
  • This also has an important strategic element when seen in the light of developments in the Indo-Pacific as well as China’s Belt and Road Initiative.

5) Multilateralism for cooperation in wider areas

  • Once the Biden administration assumes office, we should expect the U.S.’s return to multilateralism.
  • The Trans-Pacific Partnership aimed to create a rules-based order that all parties could subscribe to.
  • With the ascendancy of the Indo-Pacific paradigm and the Quad and Quad Plus, a successor to the TPP could include a wider canvas.
  • For India, this could mean cooperation beyond defence and security, including economics, technology and developments pertaining to the regional order.

Conclusion

Both countries should treat the economic and commercial dimension with as much priority as the strategic dimension. Both governments should embrace the prosperity-creating potential of such an approach.

Foreign Policy Watch: India-United States

U.S. puts India on ‘currency manipulators’ monitoring list

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Various monetary policy tools

Mains level : Currency manipulation

The U.S. Treasury has labelled Switzerland and Vietnam as currency manipulators and added three new names, including India, to a watch list of countries. Earlier it had removed India from the list in March 2019.

What is Currency Manipulation?

  • Currency manipulation refers to actions taken by governments to change the value of their currencies relative to other currencies in order to bring about some desirable objective.
  • The typical claim – often doubtful – is that countries manipulate their currencies in order to make their exports effectively cheaper on the world market and in turn make imports more expensive.

Why do countries manipulate their currencies?

  • In general, countries prefer their currency to be weak because it makes them more competitive on the international trade front.
  • A lower currency makes a country’s exports more attractive because they are cheaper on the international market.
  • For example, a weak Rupee makes Indian exports less expensive for offshore buyers.
  • Secondly, by boosting exports, a country can use a lower currency to shrink its trade deficit.
  • Finally, a weaker currency alleviates pressure on a country’s sovereign debt obligations.
  • After issuing offshore debt, a country will make payments, and as these payments are denominated in the offshore currency, a weak local currency effectively decreases these debt payments.

US treasury’s criteria

To be labelled a manipulator by the U.S. Treasury:

  • Countries must at least have a $20 billion-plus bilateral trade surplus with the US
  • foreign currency intervention exceeding 2% of GDP and a global current account surplus exceeding 2% of GDP

Implications for India

  • India has traditionally tried to balance between preventing excess currency appreciation on the one hand and protecting domestic financial stability on the other.
  • India being on the watch list could restrict the RBI in the foreign exchange operations it needs to pursue to protect financial stability.
  • This comes when global capital flows threaten to overwhelm domestic monetary policy.
  • The two most obvious consequences could be an appreciating rupee as well as excess liquidity that messes with the interest rate policy of the RBI.
  • Indian policymakers have to be sensitive for the unpredictable nature of policy-making in the US under Trump, especially concerning global trade.

Foreign Policy Watch: India-United States

US imposes CAATSA sanctions on Turkey

Note4Students

From UPSC perspective, the following things are important :

Prelims level : CAATSA, COMCASA, LEMOA , BECA

Mains level : India-US defense cooperation and Russia factor

The US has imposed sanctions on NATO-ally Turkey for its purchase of Russia’s S-400 missile defence system.

Q.What is CAATSA law? Discuss how it will impact India’s ties with Russia.

Turkey defies the US

  • Turkey decided to move ahead with the procurement and testing of the S-400, despite the availability of alternative, NATO-interoperable systems to meet its defence requirements.
  • This decision resulted in Turkey’s suspension and pending removal from the global F-35 Joint Strike Fighter partnership.

What is CAATSA?

  • CAATSA stands for Countering America’s Adversaries through Sanctions Act (CAATSA).
  • It is a US federal law that imposed sanctions on Iran, North Korea, and Russia.
  • The bill provides sanctions for activities concerning:

(1) cybersecurity, (2) crude oil projects, (3) financial institutions, (4) corruption, (5) human rights abuses, (6) evasion of sanctions, (7) transactions with Russian defence or intelligence sectors, (8) export pipelines, (9) privatization of state-owned assets by government officials, and (10) arms transfers to Syria.

Why is India concerned?

  • This sanction is of particular interest to New Delhi, which is also in the process of buying the S-400 from Moscow.
  • This action has sent a clear signal that the US will fully implement CAATSA sanctions and will not tolerate significant transactions with Russia’s defence and intelligence sectors.

What does the sanction mean?

These sanctions comprise:

  1. a ban on granting specific US export licences and authorizations for any goods or technology,
  2. a ban on loans or credits by US financial institutions totalling more than $10 million in any 12-month period
  3. a ban on US Export-Import Bank assistance for exports
  • Additionally, sanctions will include full blocking sanctions and visa restrictions as well.
  • Last year, the US had removed Turkey from its F-35 jet programme over concerns that sensitive information could be accessed by Russia if Turkey used Russian systems along with US jets.

India may get an exemption

  • Most of India’s weapons, naval arsenal, missiles, aircraft and aircraft carriers are of Soviet/Russian origin.
  • As per the Stockholm International Peace Research Institute (SIPRI) Arms Transfer Database, during the period 2010-17, Russia was the top arms supplier to India.
  • The Russian share in India’s arms imports during the same period has declined to 68 per cent, from an all-time high of 74 per cent during the 2000s.
  • The combined share of the US and Israel has increased from nine to 19 per cent.
  • Accounting for about 15 per cent, the US is the second-biggest supplier of arms to India during the five year period ending 2017.
  • Hence, US officials have earlier requested for “some relief from CAATSA” for countries like India.

China factor

  • China being more assertive and Russia finding new partners, this waiver or “carve-out” would mean India has been able to secure its interests.
  • Hence, the US has designated India as a Major Defence Partner, and both countries coming together on Indo-Pacific strategy, the newly formed Quad, are on a stable footing.

Why is CAATSA bad?

  • CAATSA impacts Indo-US ties and dents the image of the US as a reliable partner.
  • It also makes a point on principles that, as a sovereign country, India cannot be dictated about its strategic interests by a third country.
  • It also shows the need for India to be nimble-footed in its diplomacy when it comes to its key major power relationships – and one cannot be sacrificed at the cost of another.

Back2Basics: India-US Defence Partnership

  • India is a major market for the US defence industry.
  • In the last decade, it has grown from near zero to USD 15 billion worth of arms deals.
  • Since 2008, major deals include the C-17 Globemaster, C-130J transport planes, P-8 (I) maritime reconnaissance aircraft, M777 light-weight howitzer, Harpoon missiles, and Apache and Chinook helicopters.
  • In percentage terms, the US share of Indian arms imports total 23 per cent in terms of the number of contracts and 54 per cent by value.
  • This value is all set to increase further with the US likely accepting an Indian request for Sea Guardian drones.

 

Foreign Policy Watch: India-United States

Building political consensus on climate change

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- Geopolitics of climate change and India's role in it

With the victory of Joe Biden in the U.S. Presidential election geopolitics of the climate change is headed for a new reset. The article examines the role India could play in the changing geopolitical realities and also spells out the challenge for India.

India’s role in geopolitics of climate change

  • India is probably better prepared than in the past when India was widely seen as part of the problem on climate issues.
  • But the urgency of addressing climate change is likely to intensify for two reasons:
  • 1) The election of Biden as US President.
  • 2) The prospect of cooperation on climate change between Washington and Beijing.
  • India’s ability to influence the new geopolitics of climate change will depend a lot on its domestic political resilience in adapting to the new imperatives.
  • While a democratic India struggles to deal with the new internal conflicts centred on climate, China has crafted a new template of “coercive environmentalism”.
  • The Chinese model of coercive environmentalism is finding an echo among some Western environmentalists.
  • Whatever the merits of authoritarian environmentalism, it has little political chance of being replicated in democracies.

Cooperation on climate change between the US and China

  • Modernising liberal environmentalism is the essence of president-elect Biden’s commitment to integrating the climate question with the domestic policy agenda.
  • “Climate justice” is another important objective of Biden’s domestic environmental policy.
  • It is based on the recognition that pollution and other ecological problems have a greater impact on the poor and minorities.
  • Although coercive and liberal approaches to managing climate change are different, the US and China share some important objectives.
  • Both China and the US (along with the West) recognise the urgency of the challenge.
  • Beijing and Washington are also racing to develop new technologies that will constitute the foundations of the green economic future.
  • Both have zeroed in on industrial policy to achieve their climate objectives.
  • For Xi and Biden, gaining the leadership of the global movement for mitigating climate change is a strategic mission.
  • Washington and Beijing understand that climate politics is in the end about rearranging the global order.
  • Consequently, the new direction of Chinese and US policies (in partnership with Europe and Japan) will inevitably put pressure on other states for climate actions.

Conclusion

India’s real test on climate change is on building a new domestic consensus that can address the economic and political costs associated with an internal adjustment to the prospect of a great global reset.

Foreign Policy Watch: India-United States

Unfurling India’s foreign policy concerns

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- Impact of the next U.S. President's policies on India's two major concerns

The article analyses two major concerns of India which would be influenced by the policies adopted by the next U.S. President. 

Concern for India

  • What policy President-elect Joe Biden will adopt in its foreign policy will has bearing on India.
  • There are two foreign policy issues which are of great concern and interest — China and Iran in that order.
  • For the world, the equation between the United States and China may be the relationship of the greatest consequence.
  • For India, the most consequential relationship is not with the U.S. — as is sometimes claimed — but one with China.
  • What happens in greater West Asia will always remain of concern, but those interests will not be affected one way or the other by who is the President of the U.S.

Quad dynamics and China

  • In the Trump years, India signed all the ‘foundational’ agreements with America.
  • India also bought billions of dollars worth of military hardware from them.
  • India resisted converting the Quad into a primarily military or strategic grouping, and is in fact aimed solely at containing China.
  • The Quad is an anti-China coalition.
  • How far it can be successful in containing the Dragon remains to be seen.
  • India’s External Affairs Minister has stated, India will not join any military alliance.
  • However, given the fact that all the other three, and perhaps five or six in future, are already in strategic alliance with one another and with the U.S., it is highly likely that India too will be forced to agree to some form of military alliance at a future date.
  • But no external power would want to get involved on our side in case of major hostilities with China.
  • On the other hand, if there is a major skirmish or worse in the South China Sea, the other members of the Quad will expect us to join them in fighting China, in an area far removed from our shores.

Approach towards China

  • If Mr. Biden adopts a more conciliatory approach towards China, India may find ourselves in a difficult situation.
  • We do not want China to be permanently hostile to us; it will absorb huge resources, human and material.
  • The strong rhetoric employed in relation to China will need to be tempered.
  • Public opinion which has been worked up against China may make it difficult to do so immediately but the government is efficient in managing and moulding public opinion.

Approach toward Iran

  • It may be difficult for Mr. Biden to quickly reverse Mr. Trump’s adventurist policy towards Iran.
  • It may not be possible for him given the domestic compulsions, to readopt JCPOA in its original form.
  • But he will surely, if slowly, engage Tehran in talks and negotiations through Oman or some other intermediary, to reduce tensions in the region.
  • India may be able to buy Iranian oil, and sell our pharma and other goods to that country.
  • The government may also feel less constrained in investing openly in oil and other infra projects in Iran, including the rail project in which Indian Railways Construction Ltd has been interested.

Conclusion

While India can’t expect the reversal of all Trump era policies, there will be certain changes in the stance adopted by the new U.S. President and India should be prepared to deal with it.

Foreign Policy Watch: India-United States

How a Biden’s Presidency may affect India?

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not Much

Mains level : Impact of US regime change on India

Donald Trump’s rise to the White House as well as his exit has led to a wide reactionary response in India.

Also read:

[Burning Issue] India US relations in the backdrop of recent hiccups

(1) Economic Impact

Trade

  • There are several ways in which the US economy, its health and the policy choices of its government affect India.
  • For one, the US is one of those rare big countries with which India enjoys a trade surplus. In other words, we export more goods to the US than what we import from it.
  • The trade surplus has widened from $5.2 billion in 2001-02 to $17.3 billion in 2019-20.
  • Under a Biden administration, India’s trade with the US could recover from the dip since 2017-18.

FDI and FPI

  • The US is the fifth-biggest source for Foreign Direct Investment (FDI) into India. Of the total $476 billion FDI that has come in since April 2000, the US accounted for $30.4 billion — roughly 6.5 per cent — directly.
  • Only Mauritius, Singapore, Netherlands, and Japan have invested more FDI since 2000.
  • Apart from FDI the US also accounts for one-third of all Foreign Portfolio Investments (that is, investment in financial assets) into India.

Ending protectionism

  • A Biden presidency may also see a renewed push towards a rules-based trading system across the world.
  • Instead of outright ad-hocism as was the case under Trump — as well as a move away from the protectionist approach that has been getting strong across the world.

(2) Visa

  • For instance, how a US President looks at the H1-B visa issue, affects the prospects of Indian youth far more than the youth of any other country.
  • Under Trump, who severely curtailed the visa regime, thanks to his policy of “America First”, India had suffered the most.
  • That could change under Biden, who is unlikely to view immigrants and workers from India with Trump-like suspicion.

(3) Technology

  • Other points of contention between India and the US are the tricky issue of data localisation or capping prices of medicines and medical devices.
  • These have a better chance of getting towards a resolution as we move away from the radical approach of President Trump to the pragmatism of a Biden presidency.

(4) Diplomacy

  • Further, under the Trump administration, the US sanctions on Iran severely limited India’s sourcing of cheap crude oil.
  • For an economy such as India, which needs a regular supply of cheap oil to grow fast, a normalization of US-Iran relationship (and lifting of sanctions) would be more than useful.
  • On China, too, while the US apprehensions are unlikely to be fewer. It is more likely that a Biden administration will help India against China, instead of clubbing the two together.

(5) Climate Action

  • Biden has promised to rejoin the Paris Climate Accord, and this may help countries such as India in dealing with the massive challenges — both technical and financial — on this front.

Foreign Policy Watch: India-United States

The next administration will also pursue ‘America First’

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- India-U.S. relations and implications of the Presidential elections in the U.S.

The voting trend in the U.S. presidential election indicates significant support for the policies pursued by President Trump. This could impact the policies the next administration pursues.

Why U.S. election matters for the world

  • The world still has need for American leadership.
  • It remains the world’s largest net provider of global public goods.
  • It is the lynchpin of the global multilateral system.
  • If Joe Biden wins, it is possible that America will re-engage with dignity and restore mutual respect in its relations with allies and partners, beginning with the trans-Atlantic alliance.
  • However, the Trump Americans, who are the new political base, will still shape American policy irrespective of who the president is.

‘America first’ is here to stay

  • The American people believe that their education, employment and retirement have been impacted by the immigration, outsourcing and liberal trade policies of past administrations.
  • Trump America does not want more migrants, it will not support the outsourcing of jobs at the cost of their own.
  • It wants a fair deal on trade that does not allow cheaper imports to put small American businesses out of business.
  • Even a Biden administration cannot return America back to the days of open borders and free trade.
  • It might relax some categories of work-visas, but it cannot return to the time when outsourcing was the preferred option for American companies.
  • It might re-engage with the World Trade Organisation but it cannot tear down the trade barriers that Trump has erected in the name of Make in America.

Foreign policy of next administration

  • The Trump Americans do not wish to spend any more taxpayer dollars on foreign wars and they want their boys and girls to come home.
  • They think America’s allies are not carrying their weight and are unfairly living off American contributions.
  • They want their allies and partners to take greater responsibility for peace and security.
  • Biden’s supporters hope that he can reverse the abdication of American global leadership and renew alliances, but as president he may find it difficult to go against the Trump Americans on issues like China, Iran and climate change, without endangering the Democratic Party’s long-term interests.
  • And if Trump is re-elected as the president, it will only be because of his core voter base and it will strengthen his resolve.

Implications for the world

  • Whether or not America withdraws from the world, American leadership, as we know it, might be over.
  • America will become more transactional and less generous.
  • Common values like democracy or multipolarity may be of lesser importance in America’s scheme of things.
  • Whether it is Trump or Biden, the Sino-US relationship will remain complicated and rivalrous.
  • Whether it is Trump or Biden, the Obama-era nuclear deal with Iran cannot be restored.
  • Whether it is Trump or Biden, American troops will soon be gone from Afghanistan.
  • There will be less willingness to consider emerging economies as deserving beneficiaries of concessional arrangements.
  • A Biden presidency might also mean a more critical look at the record of not just authoritarian states but also democracies on issues like labour, environment and non-proliferation.

Implications for India

  • President Trump has been good for India in terms of foreign policy, less so in terms of economic policy.
  • But Delhi should equally be prepared for the Trump administration to ratchet up pressure on trade and to tighten rules on immigration.
  • With Biden, India and the US might return to a more balanced re-engagement on trade and immigration, but should be prepared for a more accommodative policy on both Pakistan and China than Trump’s.

Conclusion

Whoever is the next occupant of the White House, the way Americans voted on November 3 will shape American policy and politics for years to come.

Foreign Policy Watch: India-United States

Consolidation of quad reflects India’s political will

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Five eyes

Mains level : Paper 2- Quad and its future

Quad as new feature of Indo-Pacific

  • Australia’s participation in the Malabar exercises marks the emergence of the Quad as a new feature of the Indo-Pacific geopolitics.
  • The question is India’s ability to take full advantage of the possibilities after the US elections to construct a wide range of new international coalitions.
  • Likely changes could envelop a range of old institutions like the Five Eyes and the G-7 grouping that coordinates Western policies on global economic management.
  • We could also see the creation of a new League of Democracies that will addres issues like including the defence of shared values, commerce, corruption, taxation, climate change and digital governance.

Phases of India’s international aspiration

  • The consolidation of the Quad reflects the political will in Delhi to break free from old shibboleths and respond to security imperatives.
  • The post-Quad era opens a new phase in which India, for the first time, can help shape global institutions.
  • First phase: Idealism was the hallmark of India’s internationalism in the 1950s, the harsh politics of the Cold War quickly dampened it.
  • Second phase: In the 1970s, India embraced the radical agenda of a New International Economic Order, as the leader of the Non-Aligned Movement and the Group of 77. The results were meagre.
  • Third phase began with the end of the Cold War.
  • And as India’s own economic model collapsed, India had to focus on economic reform and prevent the world from intruding too much into its internal affairs.
  • The fear of the US activism on Kashmir and nuclear issues saw Delhi turn to Russia and China in search of a “multipolar world” that could constrain American power.
  • The BRICS forum with Russia, China, Brazil and South Africa became emblematic of this strategy.
  • Delhi also figured out that it was not possible for BRICS to constrain Beijing, since China was so much bigger than the other four members put together.
  • Fourth phase in India’s multilateralism is marked by three features — the relative rise in Delhi’s international standing, the breakdown of the great power consensus on economic globalisation, and the breakout of the US-China rivalry.

Efforts to tackle China

  • The Trump administration has already sought to imagine the Quad’s possibilities beyond the defence domain.
  • The invitation to India to join a Five Eyes meeting came amidst the bipartisan calls in the US Congress for the expansion of the forum and the inclusion of India.
  • The “Quad Plus” dialogue has variously drawn in Brazil, Israel, New Zealand, South Korea, and Vietnam for consultations with the Quad members on coordinating the responses to the pandemic.
  • India is also engaged with Japan and Australia in developing resilient supply chains to reduce the reliance on China.
  • President Trump has proposed the expansion of G-7 grouping to include Australia, India, Russia and South Korea.
  • The last few months has seen the Trump administration promote a “Clean Network” that eliminates untrustworthy vendors from telecom systems, digital apps, trans-oceanic cables and cloud infrastructure.
  • Clean Network is now a broader effort to build secure technology ecosystems among like-minded countries.
  • Britain is said to be developing plans to convene a coalition of 10 democracies, including India, that can contribute to the construction of secure 5G networks and reduce the current dependence on China.
  • France and Canada have invited India to join the Global Partnership on artificial intelligence that now includes 15 countries.
  • The objective is to promote responsible development of AI that is consistent with shared democratic values.

Conclusion

Delhi’s participation in the sweeping rearrangement of the global structures will have major consequences for India’s economic prosperity and technological future. Unlike in the past, Delhi now has the resources, leverage and political will to make a difference to the global order

Foreign Policy Watch: India-United States

The challenges of walking the Indo-Pacific talk

Note4Students

From UPSC perspective, the following things are important :

Prelims level : India FTAs

Mains level : Paper 2- Limits and challenges India faces in its engagement in Quad and Indo-Pacific construct

The article analyses the similarity, differences and limitations of the Quad and the Indo-Pacific construct and delineate the challenges India as it seeks to deal with China.

Expectations from India in countering China

  • During the mid-2000s the world expected India to be an economic powerhouse, a decade later, those expectations remain modest, at best.
  • The international community has once again decided to court New Delhi to play a decisive role in shaping the region’s strategic future.
  • The expectation this time is more strategic and military, to lead the charge against China from within the region.

Role of India in the Quad and similarity with Indo-Pacific construct

  • Quad is a forum for strategic and military consultations among India, the U.S., Australia and Japan.
  • Quad members are also major States in the Indo-Pacific region.
  • Both the Quad and the Indo-Pacific constructs are focused on China.
  • More so, they are also in some ways centred around India’s geographic location and its policies.
  • Put differently, if you take China out of the equation, they would have little rationale for existence.
  • If you take India out of the picture, their ability to sustain as geopolitical constructs would drastically diminish.

Differences between  Indo-Pacific Construct and Quad

  • The Indo-Pacific is a politico-economic vision and the Quad is a military-strategic vision which does not form the military or strategic nucleus of the first.
  • While the Indo-Pacific provides a complex political and economic picture with a hesitant, but growing, articulation of China as a strategic challenge.
  • The Quad is inherently more anti-China in character and intent.
  • The Indo-Pacific,will find it impossible to avoid engaging China, the Quad is mostly focused on diplomatic signalling and with little common intent let alone joint action.
  • Quad’s ability to succeed would entirely depend on China — the more aggressive China gets, the more resolute the Quad countries would be in strengthening it.

Comparing Indio-Pacific with BRI

  • The BRI is far more advanced, much more thought-out, and enjoyes the support of Chinese state.
  • Several Indo-Pacific countries are already members of the BRI.
  • On the flip side, the BRI is already under immense stress from its inherent weaknesses, such as China’s unilateral pursuit of the BRI and the associated economic burdens on the States that sign up to it.

Challenges India face

1) On economic front

  • There must be strong economic partnerships and linkages among its members, merely focusing on strategic talk and possible military cooperation will not work.
  • India’s recent decision not to join the Regional Comprehensive Economic Partnership (RCEP), could potentially complicate the country’s future engagements in the region.
  • Also worryinng is the already huge gap between India and China on trade with almost every Indo-Pacific country.
  • This growing trade gap will be a major determining factor in shaping the region’s strategic realities.
  • Institutional engagement: India does not have FTAs with Australia, New Zealand, the U.S., Bangladesh and the Maldives. It has FTAs with South Korea, the Association of South East Asian Nations, or ASEAN, Japan and Sri Lanka.
  • In the case of China, it has FTAs with all these countries barring the U.S.

2) On strategic and military front

  • India strategic and military engagements in the region also fall short.
  • Beijing is a major defence supplier to several of the region’s States including Bangladesh, Myanmar, Sri Lanka, Indonesia, Malaysia, the Philippines, and Thailand.
  • This dwarfs India’s minimal sales, defence dialogues and occasional joint military exercises in the region.

Way forward

  • India’s role in the Indo-Pacific will remain limited if it does not prove to be a major economic partner to these States.
  • But given the economic slowdown in India today in the wake of COVID-19 and the lack of political consensus about RCEP, India’s ability to economically engage with the region remains limited.
  • On the military-strategic side too, India’s performance in the region is less than desirable.
  • The only choice, it appears then, is for some sort of a loosely structured regional strategic alliance with the U.S. and its allies in the broader Indo-Pacific region.

Consider the question ” What are the similarities and differences in the Quad and the Indo-Pacific construct? What are the challenges India faces as it increases its engagement in the both.” 

Conclusion

India remains caught between a deeply constrained, but unavoidable, need to rethink its strategic posture, and the recognition of its material inability to do so, at least for now.

Foreign Policy Watch: India-United States

Excessive optimism over a pact with election-bound US is premature

Note4Students

From UPSC perspective, the following things are important :

Prelims level : BECA

Mains level : Paper 2- India-US and optimism

The growing pace of India-US bilateral engagement has raised hopes in several quarters. However, there are several issues that must be considered and need to avoid excessive optimism. 

Timing of 2+2 dialogue

  • The India-US 2+2 third meeting was held in Delhi only a week before the US presidential elections.
  • The government felt that it was important to seal the Basic Exchange and Cooperation Agreement (BECA) without delay.
  • Other reason could be government’s assessment that there is bipartisan support in the US for higher and positive bilateral ties.

Need for caution in India’s approach

  • In India-US ties, the leading outside consideration is China.
  • A Biden presidency, should that be the choice of the American people, would seek to ensure that China’s rise is not at the cost of the US’s global pre-eminence.
  • However, the strategy and methods it employs would be different from that of its predecessor.
  • Further, even a Trump 2 administration, with the election done, may change course in its China approach.
  • Hence, caution and prudence are good diplomatic watchwords.
  • It is good that the agreements for a full defence engagement with the US are in place.
  • But it is one matter to have them done and an entirely different one insofar as the nature and intensity of cooperation.
  • So, India’s tradition of relying on its own strengths in matters of national security should not be eroded in the hope that an outside power would provide useful inputs.

Alliance Vs. Partnership

  • India-US ties are in the framework of a partnership, not an alliance.
  • The partnership may not be based on opposition to an outside element, the alliance almost always is.
  • Alliances also demand a much higher price than partnerships, through loss of autonomy if the ally is a bigger power.

Excessive enthusiasm on Quad may be premature

  • The 2+2 joint statement does not name China but its thrust is clear.
  • The Quad is based on a commonality of concerns on account of China’s actions.
  • India’s decision to go along with a more purposive group, including through its maritime exercises, is in keeping with its interests.
  • The real direction that the Quad will take has to await the US’s overall China strategy over the next few years.
  • Excessive enthusiasm on the Quad front may, therefore, be premature.

Way forward

  • India has to change the nature of its economic and commercial ties with China.
  • Thus, the joint statement’s reference on the need to “enhance supply chain resilience and to seek alternatives to the current paradigm” was timely, though here, again, the future US approach is not entirely certain.
  • The areas where the bilateral partnership has the potential of evolving most positively for India relate to health, education and science and technology.
  • There should not be any reluctance in developing ties in defence industries, too, but it cannot be forgotten that no country will part with any of its critical technologies.
  • But there cannot be a substitute for developing indigenous capacity for India’s needs for weapon systems.

Conclusion

India-US ties will move positively forward but there will be imponderables ahead, principally arising out of US strategies towards China. But, a close embrace of another country is always problematic.

Foreign Policy Watch: India-United States

 Explained: Basic Exchange and Cooperation Agreement (BECA) VS COMCASA VS LEMOA

Note4Students

From UPSC perspective, the following things are important :

Prelims level : CAATSA, COMCASA, LEMOA , BECA

Mains level : India-US relations as a response to China

India and the United States have signed the Basic Exchange and Cooperation Agreement (BECA), which, along with the two agreements signed earlier — the LEMOA and the COMCASA.

Try this question for mains:

Q. What is the troika of “foundational pacts” of India with the US? Discuss each of them. (150W)

Completing the troika

  • The two agreements signed earlier are— the Logistics Exchange Memorandum of Agreement (LEMOA) and the Communications Compatibility and Security Agreement (COMCASA).
  • This completes a troika of “foundational pacts” for deep military cooperation between the two countries.

What is BECA?

  • BECA will help India get real-time access to American geospatial intelligence that will enhance the accuracy of automated systems and weapons like missiles and armed drones.
  • Through the sharing of information on maps and satellite images, it will help India access topographical and aeronautical data, and advanced products that will aid in navigation and targeting.

Benefits of BECA

  • This could be a key to Air Force-to-Air Force cooperation between India and the US.
  • BECA will provide Indian military systems with a high-quality GPS to navigate missiles with real-time intelligence to precisely target the adversary.
  • Besides the sailing of ships, flying off aircraft, fighting of wars, and location of targets, geospatial intelligence is also critical to the response to natural disasters.

What was the LEMOA about?

  • LEMOA was the first of the three pacts to be signed in August 2016.
  • LEMOA allows the militaries of the US and India to replenish from each other’s bases, and access supplies, spare parts and services from each other’s land facilities, air bases, and ports, which can then be reimbursed.
  • LEMOA is extremely useful for India-US Navy-to-Navy cooperation since the two countries are cooperating closely in the Indo-Pacific.

Concretizing the mutual trust

  • The critical element that underpins LEMOA is mutual trust.
  • Without trust, no country will be willing to expose its military and strategic assets such as warships to the facilities of another country.
  • The signing of LEMOA was in itself an affirmation of the mutual trust between the two militaries, and its application will enhance the trust.
  • It took almost a decade to negotiate LEMOA, and the exercise in a sense bridged the trust deficit between India and the US and paved the way for the other two foundational pacts.

What about the COMCASA?

  • COMCASA was signed in September 2018, after the first 2+2 dialogue during Mrs. Swarajs’ term as EAM.
  • The pact allows the US to provide India with its encrypted communications equipment and systems so that Indian and US military commanders, and the aircraft and ships of the two countries, can communicate through secure networks during times of both peace and war.
  • The signing of COMCASA paved the way for the transfer of communication security equipment from the US to India to facilitate “interoperability” between their forces.

Specific context and practical benefit for India

  • The strengthening of the mechanisms of cooperation between the two militaries must be seen in the context of an increasingly aggressive China.
  • Amid the ongoing standoff on the LAC in Ladakh — the longest and most serious in three decades — India and the US intensified under-the-radar intelligence and military cooperation at an unprecedented level.
  • These conversations facilitated information-sharing between the two countries, including the sharing of high-end satellite images, telephone intercepts, and data on Chinese troops and weapons deployment along the LAC.

Conclusion

  • Such agreements mark the enhancement of mutual trust and a commitment to the long-term strategic relationship.
  • The US wants India to move away from Russian equipment and platforms, as it feels this may expose its technology and information to Moscow.
  • So far, India is going ahead with the purchase of the S-400 air defence missile system from Russia, and this has been a sticking point for American interlocutors.
  • For its part, India is wary of Pakistan’s deep-rooted ties with the Pentagon, and Washington’s dependence on Rawalpindi for access to Afghanistan as well as its exit strategy.
  • But, because of the clear and present danger from China, New Delhi’s strategic embrace of Washington is the obvious outcome.

Foreign Policy Watch: India-United States

Incentives for furthering the India-US partnership are stronger than ever

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- India-US relations

Changing geopolitical factors have accelerated further the deepening of India-US ties. The article analyses the current circumstances and evolution of the bilateral relations.

Background against which 2+2 dialogue taking place

  • The 2+2 dialogue between India and the United States in Delhi this week marks an important moment in bilateral relations.
  • The 2+2 dialogue comes just three weeks after the foreign ministers of the Quad — or the Quadrilateral Security Framework — met in Tokyo.
  • It also takes place amidst a profound structural shift in great power politics as well as turbulence in the international economic order intensified by the coronavirus pandemic.
  • The dialogue follows India’s first-ever participation in a meeting of the exclusive Five Eyes grouping that facilitates intelligence-sharing among the US, Canada, UK, Australia and New Zealand.
  • A few days ago, Delhi announced the much-awaited expansion of the annual Malabar exercises to include Australia.

Background of the past engagements

  • Signing the historic civil nuclear initiative ended India’s prolonged atomic isolation in the world laid the outline of a broader framework for security cooperation.
  • Due to the deep divisions within the national security establishment, the leadership and some political constraints faced by the government, the coalition broke up.
  •  The focus was on keeping visible distance from the US in the name of non-alignment, strategic autonomy, and the quest for a multipolar world.
  • The relationship survived those years, thanks to the US’s perseverance.

3 Factors responsible for rapid progress in the US-India ties

1) Chines aggression on northern border

  • The huge military crisis on the northern borders with China that is well into the sixth month is the first factor.
  • In the past, India avoided closer security ties with the US in deference to Beijing’s sensitivities.
  • In contrast, the government now has refused to pay heed to Chinese sensitivities over its policy on security cooperation with the US.

2) Disruption caused by the corona pandemic

  • The coronavirus has sharpened the US debate on the dangers of excessive economic interdependence on China.
  • Meanwhile, India has begun to reduce its commercial ties to Beijing in response to the PLA’s Ladakh aggression.
  • This has created the conditions for a new conversation between India and the US on rearranging global supply chains away from China.
  • So, the Quad Plus conversations have drawn in Brazil, Israel, New Zealand, South Korea and Vietnam with a view to rearrange the global supply chain.

3) Focus on critical technologies

  • Third factor is critical technologies like artificial intelligence that promise to transform most aspects of modern life — including security, political economy and social order.
  • Delhi and Washington are now focused on finding ways to collaborate on the critical technologies of the 21st century and work with their partners in setting new global rules for managing them.

Conclusion

As the regional and global order faces multiple transitions, the incentives for Delhi and Washington to sustain and advance India-US partnership are stronger than ever before and will continue into the next administration.

Foreign Policy Watch: India-United States

Why India should consider the next US administration’s approach to China

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- US Presidential election and Implications for India

Though it is the election held in the US for the election of the US President, it is closely followed throughout the world given the dominant position of that country in the world and impact of the US Presidents decision on the world. This article analyses the implications for India in both the scenarios re-election of Trump or Joe Biden winning the election.

Implications for India

  • Broader foreign policy decisions will have significant implications for India.
  • Particularly consequential will be how a second Trump administration or a Biden administration perceive and approach China and, relatedly, the question of America’s role in the world.
  • The outcome will depend on the choices that the next American president makes on key personnel and policies.

Analysing Trump administration’s approach to China from India’s perspective

  • The Trump administration’s more hawkish view of China broadly converges with Indian concerns about a rising China’s actions and intentions.
  • And it has facilitated the Trump administration to assign India an important role in its strategic framework, including through the Free and Open Indo-Pacific concept.
  • This has laid the basis for defence and security cooperation, helped to manage differences with Delhi on trade, Russia, Iran, and human rights, and vocal American support for India in the ongoing crisis with China.
  • Unlike India’s subtler approach to highlighting Beijing’s malign behaviour, the administration’s more explicit one has put a global spotlight on Chinese assertiveness.
  • However, there are aspects of President Trump’s China approach that have caused concerns in Delhi.
  • There has been concern about Trump striking a deal with Chinese leader Xi Jinping since summit in April 2017.
  • The administration subsequently pivoted to competition with China that summer.
  • Concerns have also been raised due to neglect in the Trump administration of developments related to Hong Kong, Xinjiang and Huawei/ZTE.
  • The other aspects of Trump’s China approach that have given Delhi pause are its ideological dimensions, as well as responses like tariffs that have hurt India too.
  • On the similar lines American withdrawal from international institutions and agreements that has served to benefit Beijing.
  • The China prism has had its limits — it has not, for instance, resulted in concessions to India on trade and immigration.

What would be Joe Biden’s to approach towards China and implications for India

  • And there is recognition among most Democrats that the US-China relationship today is different from what it was in 2009, 2012 or 2016.
  • An Obama administration China hand noted that opinion in the US on approach to China has “moved from balancing co-operation and competition, to competition and confrontation”.
  • But what a Biden administration sees as the terms of strategic competition with China and how it might choose to blend in cooperation will have implications for India.
  • Its outcome will depend in part on the president’s views, who holds key foreign and economic policy positions, as well as Beijing’s approach.
  • India will closely watch how Biden might respond to any overtures from Beijing.
  • It will particularly worry about any signs that Washington would be willing to limit competition or criticism in return for Chinese cooperation on certain administration priorities.
  • More broadly, it will look at whether Biden administration’s Asia policy derives from its China policy or vice versa.
  • Other aspects of Biden’s preferred approach might suit India, for instance:
  • 1) acting collectively with allies and partners rather than unilaterally,
  • 2) Not imposing tariffs that hit allies and partners along with China,
  • 3) Recommitting to international organisations in ways that could blunt Chinese influence.
  • India might also broadly approve of — and could benefit from — the 3Ds of a Biden foreign policy: Domestic (renewal), deterrence, and democracy.
  •  If a Biden administration sees engagement with China on climate change, global health security and non-proliferation as a priority that will complicate the Indian government’s options and require adjustments.
  • Moreover, with either Trump or Biden, foreign economic policy choices and budgetary ones for example, spending at home versus abroad will have crucial implications for India.

Conclusion

India will need to consider what America’s choice on November 3 will mean for American power and purpose — because assessments of that could determine how Beijing decides to act in the region and globally.

Foreign Policy Watch: India-United States

Importance of maritime domain for India and role of Quad in it

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Malabar Exercise, Quad

Mains level : Paper 2- Defining the roles and relations between Malabar and the Quad

While highlighting the importance of navy for India, the article examines the need to define the role and relation between the Quad and Malabar.

The salience of navy for India

  • It took confrontation in the Himalayas to bring focus on India’s maritime domain clearly indicates that the salience of maritime power is not yet understood in India.
  • On its northern and western fronts, India faces a formidable challenge and can at best hope for stalemate due to two factors :
  • 1) Economic, military and technological asymmetry between China and India.
  • 2) Active China-Pakistan nexus.
  • Attention has, therefore, been focused on the maritime domain, where it is believed that India may have some cards to play.
  •  While preparing to fight its own battles with determination, it is time for India to seek external balancing (read Quad) — best done via the maritime domain.

Evolution of Malabar Exercise

  • Above is the backdrop against which one must see the progressive evolution of Exercise “Malabar”,
  • At beginning, it was a bilateral event involving just the Indian and US navies.
  • It became tri-lateral with the inclusion of Japan in 2015.
  • And now it has transformed into a four-cornered naval drill that will also include Australia.
  • Apart from its geo-political significance for the Indo-Pacific, this development poses two conundrums.
  • Firstly, given the same composition, what is the distinction, now, between “Malabar” and the “Quad”?
  • Secondly, does Malabar 2020 mark the release of Australia from China’s thralldom?

Defining the roles and relation betwee Malabar and Quad

  • The Quadrilateral Security Dialogue or Quad has its roots in the Core Group of four senior diplomats representing the US, India, Japan and Australia.
  • The group was formed to coordinate relief efforts after the Great Asian Tsunami of December 26, 2004.
  • The present Quad has obviously retained this tradition and its members have neither created a charter nor invested it with any substance.
  • The Quad is 16 years old now, and Malabar 28.
  • Both have served a useful purpose, and a reappraisal of the roles and relationship of the Quad-Malabar concepts is, therefore, overdue.
  • Since it is India which faces a “clear and present danger”, it should boldly take the initiative to do so.

Need for the Indo-Pacific Concord

  •  In order to rein in China’s hegemonic urges, there is need for affected nations to come together to show their solidarity and determination in a common cause.
  • In this context, there is need to create a broad-based “Indo-Pacific Concord”, of like-minded regional democracies.
  • This should be an organisation with a maritime security charter, which has no offensive or provocative connotations.
  • Using the Quad and Malabar templates, a shore-based secretariat can be established in a central location like Port Blair, in the Andaman Islands, which would schedule and conduct periodic multinational naval exercises.
  • The exercises could be structured to hone the skills of participating navies in specialisations like humanitarian assistance and disaster relief, countering non-traditional threats, undertaking search-and-rescue operations and establishing networked maritime domain awareness.
  • The Concord could also designate forces to uphold maritime security or “good order at sea”.

What Australia joining Quad means

  •  The prospect of Australia belatedly joining the Quad is expected to reinforce the Quad and enhance its credibility.
  • But there are reasons for India to be circumspect it.
  • Memories are still alive of its past political ambivalence towards India, its criticism of our naval expansion and its vociferous condemnation of the 1998 nuclear tests.
  • Nor should one overlook Beijing’s recent influence on Australia’s foreign policy.
  • This influence on Australia’s foreing policy caused it to flip-flop over the sale of uranium to India as well as its peremptory withdrawal from the Quad in 2008.

Implications of singing of BECA with the U.S.

  • India signing the BECA (Basic Exchange and Cooperation Agreement) with the US last of the four “foundational agreements” would enhance interoperability between the respective militaries.
  • However, there is need to pay heed to two valid concerns:
  • 1) Regarding the possible compromise of information impinging on India’s security.
  • 2) Whether these agreements will barter away the last vestiges of India’s strategic autonomy.

Consider the question “The changing geopolitical equations has necessitated the formation of Indo-Pacific Concord by the democracies of the region.” In light of this, elaborate on India’s role in Quad and its implications for the region”

Conclusion

Indians, given our history, should never lose sight of the truism in international relations, that it is the unerring pursuit of national interests that guides the actions and policies of every nation.

Foreign Policy Watch: India-United States

In news: International Labour Organization

Note4Students

From UPSC perspective, the following things are important :

Prelims level : ILO

Mains level : India and ILO

After 35 years, India has assumed the Chairmanship of the Governing Body of International Labour Organization (ILO).

Try this PYQ:

Q.The Partnership for Action on Green Economy (PAGE), a UN mechanism to assist countries transition towards a greener and more inclusive economies, emerged at:

(a) The Earth Summit on Sustainable Development 2002, Johannesburg

(b) The United Nations Conference on Sustainable Development 2012, Rio de Janeiro

(c) The United Nations Framework Convention on Climate Change 2015, Paris

(d) The World Sustainable Development Summit 2016, New Delhi

About the International Labour Organization

  • The ILO is a UN agency whose mandate is to advance social and economic justice through setting international labour standards.
  • Founded in 1919 under the League of Nations, it is the first and oldest specialised agency of the UN.
  • The ILO has 187 member states: 186 out of 193 UN member states plus the Cook Islands.
  • The ILO’s international labour standards are broadly aimed at ensuring accessible, productive, and sustainable work worldwide in conditions of freedom, equity, security and dignity.

About its Governing Body

  • The Governing body is the apex executive body of the ILO which decides policies, programmes, agenda, budget and elects the Director-General.
  • It meets three times a year, in March, June and November.

Significance for India

  • India will be presiding over the upcoming meeting of the Governing Body to be held in November 2020.
  • India would have the opportunity to interact with the senior officials and social partners of the member states.
  • It will also provide a platform to apprise participants of the transformational initiatives taken by the Government in removing the rigidities of the labour market.

Foreign Policy Watch: India-United States

US Secretary of state Visit to India

Note4Students

From UPSC perspective, the following things are important :

Prelims level : CAATSA

Mains level : Paper 2- India-U.S. relations

Secretary of State, Mike Pompeo makes his way to India next week, exactly a week before the election. This article discusses the various aspects that could form the part of the discussion.

Difference in U.S’s and India’s position on Quad

  • He has stated that meeting in India “would include discussions about how free nations can work together to thwart threats posed by the Chinese Communist Party”.
  • Just a few weeks ago, at the Quad Foreign Ministers meeting, U.S. Secretary of State had called for collaboration to protect people and partners from the Chinese Communist Party’s exploitation, corruption, and coercion.
  •  In contrast, India has maintained that its membership of the Quad is aligned to its Indo-Pacific policy, and by no means directed against any country.
  • While Chines aggression is changing India’s priorities, any shift in India’s position on the Quad at the U.S.’s prompting must also benefit India.

What should be the part of U.S.-India collaboration

  • It is critical to study just how India hopes to collaborate with the U.S. on the challenge that Beijing poses on each of India’s three fronts: at the LAC, in the maritime sphere, and in the South Asian Association for Regional Cooperation (SAARC) region surrounding India.
  • On the maritime sphere, discussions will include strengthening ties in the Indo-Pacific, enhancing joint military exercises like the ‘Malabar’ and completing the last of the “foundational agreements” with the Basic Exchange and Cooperation Agreement for Geospatial Cooperation (BECA).
  • In Male, the U.S. has announced a defence agreement that will pave the way for a strategic dialogue.
  • And unlike in the past, India has not objected this agreement with Male for entering in its area of influence in the Indian Ocean Region, as it will allow the U.S. to counter Chinese influence there.
  • With Sri Lanka the U.S. is in discussions on infrastructure projects, and progress on its “Millenium Challenge Corporation” (MCC) offer of a five-year aid grant of about $480 million.
  • At a time when India is delaying Sri Lanka’s requests for debt relief, given its own economic constraints, the U.S. aid offer will be seen as one way of staving off China’s inroads into Sri Lanka.
  • Most important will be how the U.S. and India can collaborate on dealing with India’s most immediate, continental challenge from China: at the LAC.
  • Apart from enhancing and expediting U.S. defence sales to India, there is must the U.S. could promise to India.
  • The U.S. must also commit to keeping the pressure on Pakistan on terrorism, despite the U.S. need for Pakistan’s assistance in Afghan-Taliban talks.
  • A firm U.S. statement in this regard may also disperse the pressure the Indian military faces in planning for a “two-front” conflict with China.

Resolving other key issues with the U.S.

  • Resolution of Trade issues, an area the Trump administration has been particularly tough, and restoration of India’s Generalised System of Preferences status for exporters should also be priority.
  • The government could press for more cooperation on 5G technology sharing, or an assurance that its S-400 missile system purchase from Russia will receive an exemption from CAATSA sanctions.

Conclusion

By inviting Secretary of State this close to the U.S. elections, New Delhi has taken a calculated and bold gamble, however, our leaders must drive a harder bargain to consolidate the pay-offs from the visit.


Back2Basics: What is CAATSA?

  • The Countering America’s Adversaries Through Sanctions Act (CAATSA) is a U.S. federal law that imposes economic sanctions on Iran, Russia and North Korea.
  • The bill came into effect on August 2, 2017, with the intention of countering perceived aggressions against the U.S. government by foreign powers.
  • It accomplishes this goal by preventing U.S. companies from doing business with sanctioned entities.

Foreign Policy Watch: India-United States

India becomes a member of UN Commission on Status of Women

Note4Students

From UPSC perspective, the following things are important :

Prelims level : UN Commission on Status of Women, ECOSOC

Mains level : Not Much

India has been elected as a member of the United Nation’s Commission on Status of Women (UN-CSW), a body of the Economic and Social Council (ECOSOC).

Try this PYQ:

Q.Democracy’s superior virtue lies in the fact that it calls into activity:

(a) The intelligence and character of ordinary men and women

(b) The methods for strengthening executive leadership

(c) A superior individual with dynamism and vision

(d) A band of dedicated party workers

UN Commission on Status of Women

  • The Commission on the Status of Women (CSW or UNCSW) is a functional commission of the UN Economic and Social Council (ECOSOC), one of the main organs within the United Nations.
  • CSW has been described as the UN organ promoting gender equality and the empowerment of women.
  • Every year, representatives gather at UN Headquarters in New York to evaluate progress gender equality, identify challenges, set global standards and formulate concrete policies to promote gender equality and advancement of women worldwide.
  • India will be a member of United Nation’s Commission on Status of Women for four years, 2021 to ‘25.
  • This year is the 25th anniversary of the famous Beijing World Conference on Women (1995).

Foreign Policy Watch: India-United States

Finding alternative to non-alignment

Note4Students

From UPSC perspective, the following things are important :

Prelims level : NAM

Mains level : Paper 2- Finding alternative to non-alignment in India's foreign policy

The article analyses role of non-alignment in India’s foreign policy and India’s struggle to find the alternative to the non-alignment.

Background

  • Non-alignment was a policy fashioned during the Cold War, to retain the autonomy of policy between two politico-military blocs.
  • The Non-Aligned Movement (NAM) provided a platform for newly independent developing nations to join together to protect this autonomy.
  • NAM campaigned for de-colonisation, universal nuclear disarmament and against apartheid.
  • After the end of the Cold War, the NAM countries were able to diversify their network of relationships across the erstwhile east-west divide.

Non-alignment and India’s foreign policy in the present context

  • For a few years now, non-alignment has not been projected by our policymakers as a tenet of India’s foreign policy.
  • India has not yet found a universally accepted alternative to the non-alignment yet.
  • “Strategic autonomy” as an alternative soon acquired a connotation similar to non-alignment, with an anti-U.S. tint.
  •  Multi-alignment has not found universal favour, since it may convey the impression of opportunism, whereas we seek strategic convergences.
  • Seeking issue-based partnerships or coalitions is a description that has not stuck.
  • “Advancing prosperity and influence” was a description External Affairs minister settled for, to describe the aspirations that our network of international partnerships seeks to further.

Role of geography and politics

  • Two major imperatives flow from India’s geography-1) economic and security interests in the Indo-Pacific space. 2) the strategic importance of the continental landmass to its north and west.
  • The Indo-Pacific has inspired the Act East policy of bilateral and multilateral engagements in Southeast Asia and East Asia and the Pacific.
  • Shared India-U.S. interests in dealing with the challenge from China in the maritime domain have been a strategic underpinning of the bilateral partnership since the early 2000s.

Issues in India’s engagement with the U.S.

  • In the immediate-term, Indian and U.S. perspectives are less convergent in India’s continental neighbourhood.
  • Connectivity and cooperation with Afghanistan and Central Asia need engagement with Iran and Russia, as well as with the Russia-China dynamics in the region.
  • Russia extends to the Eurasian landmass bordering India’s near and extended neighbourhood.
  • A close Russia-China partnership should move India to broad-base relations with Russia.
  • A strong stake in relations with India could reinforce Russia’s reluctance to be a junior partner of China.
  • As the U.S. confronts the challenge to its dominance from China, classical balance of power considerations would dictate accommodation with Russia.
  •  U.S. should see ties with India as a joint venture not an alliance in which they could pursue shared objectives to mutual benefit and accept that differences of perspectives will have to be addressed.
  • This template could have wider applicability for bilateral relations in today’s world order, which former could be described as militarily unipolar, economically multipolar and politically confused. 
  • The U.S. could acknowledge that India’s development of trade routes through Iran which could provide it route to Afghanistan and Central Asia, bypassing Pakistan and Russia, respectively.

Consider the question “India has not been able to find an alternative to NAM which has been described as the basic tenet of India’s foreign policy. Discuss.”

Conclusion

India should find the alternative to the non-alignment which accommodate its interest in relations with the U.S. at the same time allow it “strategic autonomy”.

Foreign Policy Watch: India-United States

India’s strategic autonomy and its evolution

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- Evolution of the idea of strategic autonomy

The article analyses the evolution of India’s approach to strategic autonomy from the unipolar world dominated by the U.S. to now when the Chinese threat has been looming large.

Context

  • Addressing a Southeast Asian forum last week, external affairs minister outlined India’s new quest for “strategic autonomy” in its global economic engagement.

Connection with Atmanirbhar Bharat

  • This new quest for “strategic autonomy” is the natural external complement to new economic strategy, described as “Atmanirbharata” or “self-reliance”.
  • The concept carries so much ideological baggage, its revival by Government inevitably raised many questions
  • Senior ministers and officials of the NDA government sought to reassure India’s partners that Delhi was not marching backwards.
  • When applied to the foreign policy framework, “self-reliance” becomes “strategic autonomy”.

Evolution of the idea of strategic autonomy

  • America towered over the world after the collapse of the Soviet Union in 1991.
  • India’s past emphasis on strategic autonomy was in the context of the “unipolar moment” [dominated by the U.S.] that emerged after the Cold War.
  • On the one hand, India needed Western capital as well as technology and better access to its markets.
  • On the other hand, Delhi had to protect some of its core national interests from the threats of US intervention.

India-U.S. Relations: Evolution after the Cold war

  • In the early 1990s, the Clinton Administration strong desire to resolve the Kashmir dispute between India and Pakistan.
  • The Clinton Administration saw the nuclear and Kashmir disputes as one and the same thing.
  • Indian diplomacy for the next two decades tried to change the US policy on both Kashmir and nuclear issues.
  • Under President George W Bush, the US discarded the long-standing temptation to insert itself in the Kashmir dispute.
  • The US also went out of the way to resolve the nuclear dispute with India by changing its domestic laws and international norms on nuclear proliferation.
  • The Obama and Trump Administrations have stayed the course since then.

China challenge for India

  • On the atomic front, as the US sought to lift the prolonged atomic blockade against India, China sought to block the process.
  • China turned an obstacle to India’s membership of the Nuclear Suppliers Group.
  • China takes up the Kashmir issue regularly in the United Nations Security Council.
  • Today, India’s strategic autonomy is about coping with China’s challenge to India’s territorial integrity and sovereignty.
  •  China today is viewed in Delhi as a major threat to India’s economic development.
  • The bilateral trade deficit reached nearly $55billion in 2019.
  • India pulled out of an Asia-wide free-trade arrangement called the Regional Comprehensive Economic Partnership late last year, sensing the threat posed by China-led economic order.
  • Ladakh aggression forced India to go from a passive commercial withdrawal to an active economic decoupling from China.

Way forward

  • The logic of strategic autonomy from China nudges India to look for strong security partnerships with the US, Europe, Japan and Australia.
  • On the economic front, India is exploring various forms of collaboration with a broad group of nations that have a shared interest in developing trustworthy global supply chains.

Consider the question “Delineate the evolution of India’s approach towards the idea of strategic autonomy. How it differs from the past?”

Conclusion

Threats to either territorial integrity or economic prosperity are powerful enough on their own to compel drastic changes in any nation’s policies. Coming together, they promise to make strategic autonomy from an assertive China an enduring theme of India’s economic and foreign policies in the years ahead.

Foreign Policy Watch: India-United States

Strategic autonomy in foreign policy

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- Strategic autonomy and alignment with the U.S.

India has been maintaining strategic autonomy in its foreign policy since Independence. But the end of Cold War and growing closeness towards the U.S. raises concerns. This article addresses this issue.

India’s foreign policy: characterised by autonomy

  • India has historically prided itself as an independent developing country which does not take orders from or succumb to pressure from great powers.
  • Indian maintained this stance in its foreign policy when the world order was bipolar from 1947 to 1991, dominated by the U.S. and Russia.
  • Also, when the world was unipolar from 1991 to 2008, dominated by the U.S.
  • Or when it is multipolar as at the present times.
  • The need for autonomy in making foreign policy choices has remained constant.

Flexibility in foreign policy

  • However, strategic autonomy has often been adjusted in India’s history as per the changing milieu.
  • During the 1962 war with China, Prime Minister Nehru, had to appeal to the U.S. for emergency military aid.
  • In the build-up to the 1971 war with Pakistan, Prime Minister Indira Gandhi had to enter a Treaty of Peace, Friendship and Cooperation with the Soviet Union to ward off both China and the U.S.
  • And in Kargil in 1999, India welcomed a direct intervention by the U.S. to force Pakistan to back down.
  • In all the above examples, India did not become any less autonomous when geopolitical circumstances compelled it to enter into de facto alliance-like cooperation with major powers.
  • Rather, India secured its freedom, sovereignty and territorial integrity by manoeuvering the great power equations and playing the realpolitik game.

Concerns over India’s growing closeness to the U.S.

  • As India is facing China’s growing aggression along the LAC, Non-alignment 2.0 with China and the U.S. makes little sense.
  • Fears that proximity to the U.S. will lead to loss of India’s strategic autonomy are overblown.
  • Because independent India has never been subordinated to a foreign hegemon.

What should be India’s strategy

  • In the threat environment marked by a pushy China, India should aim to have both- American support and stay as an independent power centre by cooperation with middle powers in Asia and around the world.
  • For India complete dependence on the U.S. to counter China would be an error.
  • Such complete dependence would be detrimental to India’s national interest such as its ties with Iran and Russia and efforts to speed up indigenous defence modernisation.
  • A wide and diverse range of strategic partners, including the U.S. is the only viable diplomatic way forward in the current emerging multipolar world order.

Consider the question “Does India’s close alignment with the U.S. harms its strategic autonomy? Suggest the strategy to balance India’s security concerns and maintaining strategic autonomy.”

Conclusion

We are free and self-reliant not through isolation or alliance with one great power, but only in variable combinations with several like-minded partners. India is familiar with the phrase ‘multi-vector’ foreign policy. It is time to maximise its potential.

Foreign Policy Watch: India-United States

A new direction for India-U.S. ties

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- India-U.S. ties

This article analyses what the new shift in the India-U.S. ties will require for the mutual benefit.

Following 12 factors would influence the depth and longevity of the India-U.S. ties.

1) Outcome of the  U.S. Presidential elections

  • The success of India’s new bonding with the U.S. will depend on the outcome of the U.S. Presidential elections.
  • The Democratic party candidate with the Left wing and liberals in the U.S. has been highly critical of the Citizenship (Amendment) Act.

2) Need to build trust with the U.S.

  • India purchased of the S-400 air defence missile system from Russia disregarding the U.S. concerns.
  • India refused to send Indian troops to Afghanistan.
  • We need to build trust with the U.S. that we will give to the U.S. as good as it gives us.
  • For this structuring we must realise that India-U.S. relations require give and take on both sides.
  • What India needs to take today is for dealing with the Ladakh confrontation with China.
  • India needs U.S. hardware military equipment.

3)  Fighting the U.S. enemy in neighbourhood

  • The U.S. needs India to fight her enemies in the neighbourhood such as in Afghanistan.
  • India should send two divisions gradually to Afghanistan and relieve U.S. troops to go home

4) Intelligence sharing and cooperation

  • India needs the support of the U.S. and its ally, Israel, in cyberwarfare, satellite mappings of China and Pakistan.
  • There is a need for sharing intercepts of electronic communication, hard intelligence on terrorists, and controlling the military and the Inter-Services Intelligence in Pakistan.

5) Developing naval bases

  • India needs the U.S. to completely develop the Andaman & Nicobar, and also the Lakshadweep Islands as a naval and air force base.
  • These naval bases can be used by the U.S  and shared along with its allies such as Indonesia and Japan.

6) Economic relations and India’s concerns

  • The economic relations must be based on macroeconomic commercial principles.
  • Free, indiscriminate flow of U.S. foreign direct investment (FDI) is not in India’s national interest.

7) Technology sharing

  • India needs technologies such as thorium utilisation, desalination of sea water, and hydrogen fuel cells.

8) U.S. should allow import of agricultural product

  • The U.S. must allow India’s exports of agricultural products including Bos indicus milk, which are of highly competitive prices in the world.

9) FDI in India

  • FDI should be allowed into India selectively from abroad, including from the U.S.
  • FDI in India should be based on the economic theory of comparative advantage and not on subsidies and gratis.

10) Tariffs

  • Tariffs of both India and the U.S. should be lowered, and the Indian rupee should be gradually revalued to ₹35 to a dollar.
  • Later, with the economy picking up, the rupee rate should go below 10 to the dollar.

11) Stay away from certain issues

  •  India should not provide the U.S. with our troops to enter Tibet, or be involved in the Hong Kong and Taiwan issue.
  • There is always a possibility of a leadership change in China.
  • Thus, China’s policy changed very favourably towards India.
  • In the cases of Tibet, Taiwan, and Hong Kong, we have made explicit agreements.
  • In the case of Tibet, two formal treaties were signed by Nehru (1954) and A.B. Vajpayee (2003).

12) Trilateral commitment to world peace

  • In the long run, India, the U.S., and China should form a trilateral commitment for world peace provided Chinese current international policies undergo a healthy change.

Consider the question “What are the factors influencing the India-U.S. ties? Suggest the pathway to address the issues that hamper the deepening of India-U.S. ties.”

Conclusion

Both countries need to recognise each other’s concern and work towards the deepening of the ties for the mutual benefit and with a view to dealing with the challenges confronting both the countries.

Foreign Policy Watch: India-United States

Global coalition of democracies amid Chinese assertion

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- Global coalition of democracies

In the recent speed Mike Pompeo, the US Secretary of State, floated the idea of an ‘alliance of democracies’. This article discusses its implications for India.

Two propositions on China

  • The US Secretary of State laid out two propositions.
  • One is that nearly five decades of US engagement with China have arrived at a dead-end.
  • Second is that the US can’t address the China challenge alone and called for collective action.
  • He mused on whether “it’s time for a new grouping of like-minded nations, a new alliance of democracies.”

How it matters for India?

  • Both the propositions signal the breakdown of the relationship between the world’s two most important powers.
  • They also reflect on the need to create new frameworks to cope with emerging global challenges.
  • China, is a large neighbour of India and America, is India’s most important partner makes the new context rather different from the Cold War.

Concerns for India in the propositions

  •  Many in Delhi would like to know if the current direction of China policy will endure if Joe Biden wins the presidential election in November.
  • India must pay close attention to the unfolding China debate in the US.
  • India also note the structural changes in American engagement with China over the last two decades.
  •  Delhi will certainly avoid calling the group proposed by US Secretary of State an “alliance”.
  • India would rather have it described as a “coalition of democracies”.

Idea of ‘Coalition of democracies’

  • Over the last many years, India has become comfortable with the idea of a political partnership with the world’s leading democracies.
  • India also supported past US initiatives like-Clinton Administrations “Community of Democracies”, Bush Administrations democracy promotion fund at the UN.
  • Delhi has also welcomed President Trump’s initiative to convene an expanded gathering of the G-7 leaders.
  • The idea of democracies working together has an enduring appeal for the US.
  • India figures in this American vision is relatively new. So is Delhi’s readiness to reciprocate.

Consider the question “In the ongoing geopolitical situation the U.S. has proposed the idea of ‘alliance of democracies’. Where does India feature in this vision and what are the implications of it for India.”

Conclusion

Constructing a global coalition of democracies will take much work and quite some time. But engaging with that initiative, amidst the rise and assertion of China, should open a whole range of new possibilities for Indian foreign and security policies.


Original article:

https://indianexpress.com/article/opinion/columns/us-india-democracy-china-cold-war-global-economy-6526409/

Foreign Policy Watch: India-United States

U.S. stance on CAATSA unchanged

Note4Students

From UPSC perspective, the following things are important :

Prelims level : CAATSA, COMCASA, LEMOA agreements

Mains level : India-US relations

Recently India had planned for the purchase of Mig-19 fighter aircraft with Russia at an estimated Rs. 18,148 crore. The U.S has reacted to countries, including India, on sanctions for the purchase of Russian arms has not changed.

Practice question for mains:

Q.What is CAATSA law? Discuss how it will impact India’s ties with Russia.

About CAATSA

  • CAATSA stands for Countering America’s Adversaries through Sanctions Act (CAATSA).
  • It is a US federal law that imposed sanctions on Iran, North Korea, and Russia.
  • The bill provides sanctions for activities concerning:

(1) cybersecurity, (2) crude oil projects, (3) financial institutions, (4) corruption, (5) human rights abuses, (6) evasion of sanctions, (7) transactions with Russian defence or intelligence sectors, (8) export pipelines, (9) privatization of state-owned assets by government officials, and (10) arms transfers to Syria.

A cause of worry

  • While the US has become its second-largest defence supplier, mainly of aircraft and artillery, India still relies heavily on Russian equipment, such as submarines and missiles that the US has been unwilling to provide.
  • Seventy per cent of Indian military hardware is Russian in origin.
  • India is set to receive the S-400 Triumf air defence system.

Is India the only country facing CAATSA sanctions?

  • Notably, Russia is India’s major defence supplier for over 6 decades now, and Iran is India’s second-largest oil supplier.
  • By coincidence, CAATSA has now been invoked by the US twice already, and both times for countries buying the Triumf system from Russia.
  • In September 2018, the US announced sanctions for the procurement of the S-400 Triumf air defence system and Sukhoi S-35 fighter aircraft.
  • Washington expelled Turkey from the F-35 fighter jet programme in July this year after the first delivery of S-400s was received.
  • India is neither like China, which has an inimical relationship with the U.S., and hence not bound by its diktats, nor like Turkey which is a NATO ally of the US.

Foreign Policy Watch: India-United States

Private: H-1B Visas Temporarily Suspended

Note4Students

From UPSC perspective, the following things are important :

Prelims level : H1B visa basics

Mains level : Indo-US Relations

  • The US President Donald Trump has issued a presidential proclamation announcing his decision to suspend certain categories of non-immigrant visas including the coveted foreign work visas such as the H-1B, H-4, H-2B visa, J and L visas till December 31, 2020.
  • It will come into effect from June 24.

What are these non-immigration H-1B, H-2B, L and other work visas?

  • To fill a vacuum of highly-skilled low-cost employees in IT and other related domains, the US administration issues a certain number of visas each year which allows companies from outside the US to send their employees to work on client sites.
  • When a person travels to the US with a non-immigrant visa, then he/she has to depart from the US by the date of visa expiration. It allows one to work for a specific employer only. 

H1B Visa

    • It is most popular among Indian IT companies. Issued for a period of 3 to 6 years.
    • Meant for persons in Specialty Occupation: to work in a specialty occupation, one requires a higher education degree or its equivalent.
    • The total number of H-1B visas issued annually: 85,000.
    • Of these, 65,000 H-1B visas are issued to highly skilled foreign workers, while the rest 20,000 can be additionally allotted to highly skilled foreign workers who have a higher education or master’s degree from an American university.
    • Indian nationals have been receiving about 70% of these work permits, the majority of them, software engineers working for technology companies.
    • H-1B visa holders who are currently not in the US can still re-enter the country. This visa ban also does not impact people waiting for visa renewals who are already in the US.

H2 B Visa

    • It permits employers to hire foreign workers to come temporarily to the United States and perform temporary nonagricultural services or labor on a one-time, seasonal, peak load or intermittent basis.
    • H-2B visa holders are allowed for one year, with renewal for two years.

L Visa

    • Meant to transfer candidates who already work for a foreign branch of a US-based company, or are planning to open operations in the US of a foreign-based company.
    • Holders are granted an initial three years of stay in the U.S, which is subject to further extension up to 7 years.

The key difference between H1B and H1B1 visas: 

    • H-1B visa permits for “dual intent” which means that a foreign national will be coming to work in a professional position temporarily while also intending to immigrate to the United States at some point in time in the future. H-1B visa holders can apply for permanent residency by applying for a green card.
    • H1B1 visa applicants, however, have to demonstrate that they do not intend to immigrate to the United States at all.

Is this visa suspension an economic initiative or a political agenda? 

  • Immigration policy experts and lawyers have said that it appears to be driven more by political considerations than economic ones as it is a mere reflection of Trump’s ‘buy American, hire American’ stance.
  • Trump, who won the first term on the back of anti-immigration rhetoric, has encouraged policies that have favoured US technology companies for H-1B visas as against the traditional Indian IT companies.
  • In January 2017, after taking over as the president of the US, Trump had hinted that the low-cost workers were hampering the economy and undercutting the jobs of citizens.
  • The US had then hinted at reforming the “broken” H-1B visa system.
  • According to the US Bureau of Labour Statistics – While overall unemployment has risen from 4% in January 2020 to 13.5% in May 2020 – In Computer Occupations it has come down from 3% in January 2020 to 2.5% in May 2020. Presently, 625000 job vacancies are still available.
  • This shows that in the IT sector the skill scarcity is so high that the “unemployment reason” being cited is not at all economically justified.
  • In the opinion of political analysts – Trump seized the opportunity provided by the economic contraction due to Covid-19 by first banning the entry of non-immigrant workers till June 23, and then extending it till December 31.

The Response of Indian Tech Giants

  • Indian tech companies like Infosys, Wipro and TCS are progressively ramping up their presence in the US by stepping up local hiring, either setting up local innovation centres or tying up with local universities to work in newer technology areas. 
  • These companies are associating with local technical varsities to help in promoting STEM (Science, Technology, Engineering and Math) education.
  • A recent announcement was made by Infosys, India’s second-largest IT services company, that it will open its next technology and innovation centre in Hartford, Connecticut, the second of four such units in the US, and hire 1,000 American workers in the state by 2022.
  • Cognizant,  recently formed a $100-million non-profit foundation to support STEM, digital education and skills initiatives for US workers and students.
  • Tata Consultancy Services (TCS) has recently given a grant of $35 million to Carnegie Mellon University to fund a new facility and student scholarships.

What are the disadvantages of this move to the US tech sector?

According to expert estimates, this policy on work visas is only going to hurt the US’s own competitiveness, inhibit economic investment, and have a counterproductive effect:

  • Reduce productivity of American workers: Skilled workers that have been travelling to the US  under the H-1B visas and L-1 one visas have also enabled the necessary talent to go in and augment American workers in support of specialised technology fields, which will now come to an end.
  • Many of the companies that utilise H-1B workers are also using and creating training programmes to create integrated teams that can support the work and which can train more American workers in the skills that are necessary for high skilled IT jobs. This is a major loss to the US economy.
  • Divert skilled work-force to other countries: Such politically motivated policy will likely divert highly talented STEM-educated workforce to other high growth countries.
  • Offshore work: Industry body Nasscom opines – “The move is misguided and harmful to the US economy and it could possibly force more work to be performed offshore since the local talent is not available in the country”.
  • Effect R&D sector: Lack of talent being flown in would negatively impact Research & Development in the US tech sector.

Challenges caused to Indian IT Sector

  • Adversely affect New workers and dependents: Foreign nationals outside the US, who were to begin work on an H-1B visa or even L-1 visas (intra-company transfer) – but do not as yet hold a valid visa, as well as dependents who were to accompany them (be it spouses or dependent children) will have to wait longer, till the ban expires.
  • H-2B aspirants and select category of J-1 exchange program participants (interns, trainees, teachers, camp counsellors and summer work travel participants) who are outside the US and are not holding a valid visa will also be impacted by the ban.
  • As per the United States Citizenship and Immigration Services (USCIS) – typically between 60-70 percent of the new H-1B visas are issued to Indians, the sponsoring employers comprise both MNCs and Indian headquartered companies, with the former hiring in larger numbers in fact. “This ban disproportionately impacts Indian nationals.”
  • L-I visa applicants do not even directly compete with the US workforce as they are foreign executives, managers or specialised knowledge employees of global and international organizations being transferred to the related US entity. It does not make sense to suspend their entry.
  • The marginal and low wage employees are to be the worst hit by the changes brought about in the H1B1 visa system.

Benefits of the move for the Indian tech industry

  • Newer opportunities for Indian high skilled workers in the IT sector in other countries outside of the US – NASSCOMs Virtual Trade Mission To Canada during 22-25 2020 – The program was a first-of-its-kind opportunity to understand Canada’s rich tech and innovation ecosystem. It was participated by 63 member companies.
  • Reverse Brain gain: H1B1 has drawn away the best talent from India for decades. This move may cause reverse brain gain for better growth of the Indian tech industry.
  • R&D: Better Innovation, Research & Development for nurturing the growing start-up sector in India.
  • Most of the companies have become capable of handling their work remotely in the wake of the COVID-19 pandemic. This has provided resilience to the Indian tech sector against international mobility restrictions.

Will this move impact the bilateral ties between India & the US? 

  • The freezing of non-immigration work visas is more of a US election-related issue rather than an indication of any mutual problems between India and the US.
  • India & US share global strategic partnership, based on shared democratic values and similarity of interests on bilateral, regional and global issues.
  • However despite this strong bond and despite hectic talks at diplomatic levels between India and the US, the Trump administration decided in favour of implementing the ban.
  • The issue becomes a sensitive one as US cooperation becomes strategically necessary for India amid its border tensions with China and ongoing skirmish with Pakistan.
  • Nasscom has been seeking exemptions for Indian tech workers on grounds that they come under the category of essential workers.

Foreign Policy Watch: India-United States

UN Arms Trade Treaty (ATT)

Note4Students

From UPSC perspective, the following things are important :

Prelims level : UN Arms Trade Treay

Mains level : Arms Trade Treay and its significance

China will join a global pact to regulate arms sales that has been rejected by the United States.

The New START, INF, Open Skies and now the ATT …. Be clear about the differences of these treaties. For example- to check if their inception was during cold war era etc.

What is the Arms Trade Treaty?

  • The Arms Trade Treaty is a multilateral treaty that regulates the international trade in conventional weapons. It entered into force on 4th December 2014.
  • The ATT is an attempt to regulate the international trade of conventional weapons for the purpose of contributing to international and regional peace; reducing human suffering; and promoting co-operation, transparency, and responsible action by and among states.
  • 105 states have ratified the treaty, and a further 32 states have signed but not ratified it.
  • India has abstained from voting for this Treaty

Highlights of the treaty

ATT requires member countries to keep records of international transfers of weapons and to prohibit cross-border shipments that could be used in human rights violations or attacks on civilians. The treaty would ensure that no transfer is permitted if there is a substantial risk that it is likely to:

  • be used in serious violations of international human rights or humanitarian law, or acts of genocide or crimes against humanity;
  • facilitate terrorist attacks, a pattern of gender-based violence, violent crime, or organized crime;
  • violate UN Charter obligations, including UN arms embargoes;
  • be diverted from its stated recipient;
  • adversely affect regional security; or
  • seriously impair poverty reduction or socioeconomic development.

China’s agenda at ATT

  • Beijing saying it is committed to efforts to “enhance peace and stability” in the world.
  • It comes after the US announced plans last year to pull the United States out of the agreement which entered into force in 2014.
  • The US Senate never ratified the 2013 Arms Trade Treaty after former president Barack Obama endorsed it, and Trump has said he would revoke his predecessor’s signature.

Why has India abstained?

  • From the beginning of the ATT process, India has maintained that such a treaty should make a real impact on illicit trafficking in conventional arms and their illicit use especially by terrorists and other unauthorized and unlawful non-state actors.
  • India has also stressed consistently that the ATT should ensure a balance of obligations between exporting and importing states.
  • However, the ATT is weak on terrorism and non-state actors (undoubtedly Pakistan) and these concerns find no mention in the specific prohibitions of the Treaty.
  • Further, India cannot accept that the Treaty is used as an instrument in the hands of exporting states to take unilateral force majeure measures against importing states parties without consequences.

Also read:

U.S. set to exit the ‘Open Skies Treaty’ Copy

Foreign Policy Watch: India-United States

The 5G Club ‘D10’

Note4Students

From UPSC perspective, the following things are important :

Prelims level : D10 Club

Mains level : Not Much

Britain said that it was pushing the U.S. to form a club of 10 nations that could develop its own 5G technology and reduce dependence on Huawei.

We can expect prelims question asking the purpose of the D10 group like-

Q. The D10 Club recently seen in news is a- Environment NGO/ Group of Democracies/ etc.

The D10 Club

  • The Britain is proposing a ‘D10’ club of democratic partners that groups the G7 nations with Australia and the Asian technology leaders South Korea and India.
  • It would include G7 countries – UK, US, Italy, Germany, France, Japan and Canada – plus Australia, South Korea and India.
  • It is aimed for channelling investments into existing telecommunication companies within the 10 member states.
  • The group aim to create alternative suppliers of 5G equipment and other technologies to avoid relying on China.

Ruling out Huawei

  • Britain has allowed the Chinese global leader in 5G technology to build up to 35% of the infrastructure necessary to roll out its new speedy data network.
  • But their PM Boris Johnson was reported to have instructed officials to draw up plans to cut Huawei out of the network by 2023 as relations with China sour.

Foreign Policy Watch: India-United States

U.S. set to exit the ‘Open Skies Treaty’ Copy

Note4Students

From UPSC perspective, the following things are important :

Prelims level : OST, INF Treaty, New START policy

Mains level : US-Russia power tussle

The U.S. has given notice that it will exit the Open Skies Treaty (OST) in response to Russia who had allegedly violated the treaty.

The New START, INF and now the OST …. Be clear about the differences of these treaties. For example- to check if their inception was during cold war era etc.

Open Skies Treaty (OST)

  • OST is an agreement that allows countries to monitor signatories’ arms development by conducting surveillance flights over each other’s territories.
  • The idea behind the OST was first proposed in the early years of the Cold War by former U.S. President Dwight Eisenhower.
  • It came to existence decades later and was signed in 1992, during the George H.W. Bush presidency and after the Soviet Union had collapsed.
  • The OST came into effect in 2002 under the George W. Bush administration and it allows its 34 signatories to conduct unarmed reconnaissance flights over the territory of treaty countries.

Issues with the OST

  • The U.S. has used the treaty more intensively than Russia.
  • Between 2002 and 2016, the U.S. flew 196 flights over Russia (in addition to having imagery from other countries) compared to the 71 flights flown by Russia.

Significance

  • The U.S.’s exit last year from other arms deal the West had signed with Russia — the Intermediate-Range Nuclear Forces (INF) treaty — as well as its imminent departure from the OST has raised the strong possibility that the Trump administration may not renew the New Start Treaty.
  • The New START Treaty was signed by the Obama administration with Russia that caps Russian and U.S. nuclear arsenal. The New Start Treaty is due to expire in February 2021.
  • The Trump administration has been worried that extending New START would negatively impact an arms deal with China and Russia.
  • It is concerned that China’s nuclear stockpile could be doubled if the New Start Treaty continued as is, without including China.

Back2Basics: New START pact

  • The New Strategic Arms Reduction Treaty (New START) pact limits the number of deployed nuclear warheads, missiles and bombers and is due to expire in 2021 unless renewed.
  • The treaty limits the US and Russia to a maximum of 1,550 deployed nuclear warheads and 700 deployed missiles and bombers, well below Cold War caps.
  • It was signed in 2010 by former US President Barack Obama and then-Russian President Dmitry Medvedev.
  • It is one of the key controls on superpower deployment of nuclear weapons.
  • If it falls, it will be the second nuclear weapons treaty to collapse under the leadership of US President Donald Trump.
  • In February 2019, the US withdrew from the 1987 Intermediate-Range Nuclear Forces Treaty (INF), accusing Moscow of violating the agreement.

INF Treaty

  • Under the INF treaty, the US and Soviet Union agreed not to develop, produce, possess or deploy any ground-based ballistic and cruise missiles that have a range between 500 and 5,500 km.
  • It exempted the air-launched and sea-based missile systems in the same range.
  • The INF treaty helped address the fears of an imminent nuclear war in Europe.
  • It also built some trust between Washington and Moscow and contributed to the end of the Cold War.

Foreign Policy Watch: India-United States

Why US’s offer of financial aid to Greenland has angered Denmark?

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Greenland and its geographical features

Mains level : Neo-imperialism and its re-emergence

Context

  • The US had last year sent a proposal to “purchase” Greenland from the Nordic nation.
  • This proposal follows plans by the US government to open a consulate in Nuuk, Greenland’s capital.
  • This move is being considered to be “extremely provocative” interference by the US.

Go for a detailed map reading of the Arctic region. It has been in news for several times this year.

Why is the US opening a consulate in Greenland?

  • The US is opening a consulate in Greenland after nearly seven decades of closing its first consulate after the Second World War.
  • Russia has been steadily expanding its military presence in the Arctic and China has done its bit on the economic front.

US’s interests in Greenland

1) Domestic interest

  • The US claims that its aid is to ensure “sustainable growth” in the autonomous island.
  • It also cited Russia’s “aggressive behavior and increased militarisation in the Arctic” and China’s “predatory economic interests” as reasons for the decision.
  • The US acquiring new territory under Trump would appeal to the nationalistic and imperialistic views of Americans.
  • Acquiring Greenland would also secure Trump’s position in US history of having been the third president to add land to the country’s territory.

2) Strategic interest

  • Due to climate change, the Arctic ice is melting at an accelerated rate, opening up water routes for military and maritime trade.
  • This is in addition to global superpowers and regional players vying for control over Greeland’s vast untapped natural resources.

3) Economic interest

  • Greenland is also a resource-rich landmass, strategically located between the Arctic Sea and the Atlantic Ocean, with some of the largest deposits of rare-earth metals, including iron-ore, uranium, and by-products of zinc, neodymium, praseodymium, dysprosium and terbium.
  • These rare-earth metals are used in the production of electric cars, mobile phones and computers.
  • For the longest time, China has been the world’s largest supplier of these rare-earth metals and has expanded its acquisitory plans by excavating mines across the African continent.
  • An acquisition of Greenland would make the US less reliant on China for these rare-earth metals.
  • Greenland, as a part of the Arctic region, also has large deposits of undiscovered oil and gas, resources that the US always wants more of.

The US obsession

  • Trump’s interest in Greenland is almost an extension of his world view and US foreign policy in his administration.
  • Purchasing another country or territory is unusual, but the US government has done this twice before.
  • Erstwhile President Thomas Jefferson acquired Louisiana from the French in 1803 and the second time when President Andrew Johnson purchased Alaska from Russia in 1867.

Back2Basics: Greenland

  • Greenland is the world’s largest island located between the Arctic and Atlantic oceans, east of the Canadian Arctic Archipelago.
  • It is an autonomous territory within the Kingdom of Denmark.
  • Though physiographically a part of the continent of North America, Greenland has been politically and culturally associated with Europe
  • The majority of its residents are Inuit, whose ancestors migrated from Alaska through Northern Canada, gradually settling across the island by the 13th century.

Foreign Policy Watch: India-United States

[pib ] Indo-U.S. Science and Technology Forum

Note4Students

From UPSC perspective, the following things are important :

Prelims level : IUSSTF

Mains level : India-US collaboration in STEM

Indian students will undertake a research internship at Viterbi School of Engineering, University of Southern California, LA, USA under the IUSSTF Program.

What is IUSSTF?

  • IUSSTF is an acronym for the Indo-U.S. Science and Technology Forum.
  • It is established under an agreement between the Governments of India and the USA in March 2000.
  • It is an autonomous bilateral organization jointly funded by both the Governments that promote Sci-Tech, Engineering and Innovation through substantive interaction among government, academia and industry.
  • The Department of Science & Technology, Governments of India and the U.S. Department of States are respective nodal departments.

About Viterbi Program

  • The Viterbi Program of IUSSTF was developed between IUSSTF and the Viterbi School of Engineering, University of Southern California (USC).
  • This program is a part of the Government’s endeavour to encourage research and development amongst the bright young Indian minds to create long-term, sustainable, and vibrant linkages between India and the US.

Foreign Policy Watch: India-United States

The ambit and the limits of ‘diaspora diplomacy’

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 2- Indian diaspora and limits on its ability to influence.

Context

It is necessary for New India to look at the political choices of Indian migrants abroad through a more realistic lens.

Indian diaspora

  • Largest diaspora and highest remittances: India has the world’s largest diaspora, about 17.5 million and receives the highest remittance of $78.6 billion from Indians living abroad (Global Migration Report 2020).
  • Impact of the diaspora back home: Members of the diaspora, often seen as more “successful” and therefore more influential, can have a big impact on their relatives back home.

Certain wrong premises: The promise of the diaspora’s dual power is based on certain faulty premises.

1. Transferability of vote: To start with, the transferability of votes has not yet been proven conclusively.

    • It is necessary and timely that the government re-analyses the benefits accrued from the diaspora’s political presence through a more realistic lens.
    • One obvious reason is that the Indian community isn’t large enough to make a difference in the voting patterns in any of these countries.
    • The second is that the population that comes out for the rallies doesn’t represent the entire diaspora.

2. Not necessarily support the government: The second issue is that politically active members of the Indian diaspora don’t necessarily support the Indian government’s actions, and often because they are of Indian origin, hold the government in New Delhi to higher standards than they do others.

  • Concern over CAA and Kashmir Issue: The U.S. House Foreign Affairs Committee Chairperson for Asia, Ami Bera, voiced his concerns quite plainly about Kashmir and Citizenship (Amendment) Act (CAA) during a visit to India last month.
  • Criticism of the government actions: The sponsor of the U.S. House resolution on Kashmir (HR745) Pramila Jayapal; co-chair of U.S. Presidential candidate Bernie Sanders’s campaign Ro Khanna; and former presidential contender Kamala Harris, have all been openly critical of the government’s actions.

What should the government do? The conclusion for the government is that it cannot own only that part of the diaspora that supports its decisions, and must celebrate the fact that members of the Indian diaspora, from both sides of the political divide, are successful and influential.

3. Diaspora as a factor in bilateral relation: The government must ensure that its focus on the diaspora doesn’t become a factor in its bilateral relations.

  • While it is perfectly legitimate and laudable to ensure the safety and well-being of Indian citizens in different parts of the world, it must tread more lightly on issues that concern foreign citizens of Indian origin.

4.Introduction of India’s internal politics:

  • The introduction of India’s internal politics into this equation is another new angle, one that led the British Foreign Office to remonstrate with India about interference last December.
  • Politically affiliated Indian diaspora chapters are now also playing old India-Pakistan fault-lines amongst immigrants, which in the past were fuelled by Pakistani agencies.
  • In California primaries this month, local “Hindu-American” groups protested against Democratic candidates like Ro Khanna for joining the Congressional Pakistan caucus and for criticising New Delhi’s actions.

5. Impact on diaspora:

  • Conflating POI with citizens of India: The government must consider the impact that policies conflating the PIOs with Indian citizens could have on the diaspora itself.
  • Ability to assimilate: Most immigrant Indian communities have been marked by their ability to assimilate into the countries they now live in.
  • Much of that comes from a desire to be treated as equal citizens, not as immigrants, while a few also have bad memories of anti-immigrant sentiments in the 1960s and 1970s in Europe and the U.S. when they were targeted and accused of “divided loyalties”.

Conclusion

Laying claim to diasporas kinship and culture and taking pride in their success is one thing. It would be a mistake to lay claim to their politics, however.

 

Foreign Policy Watch: India-United States

After the Trump visit

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 2- India-US relations.

Context

President Trump’s visit had the right optics. Attention must now turn to India-US priority areas.

What were the mutual gains and highlights of the visit?

  • Security: Homeland Security is an American expression. For us to own it shows our concerns on cross-border sponsored terrorism.
  • Nuclear technology: Our nuclear VVER power plant technologies are state of the art and of Russian and French design.
    • Fast breeder: Good, but one more is better. We are well on the way to the fast breeder on the thorium route and these nuclear turbines are an essential step.
    • Unlimited thorium: We don’t have much uranium but unlimited thorium, so in the long run, apart from solar, this is the energy future.
    • Insurance obstacle resolved: Obviously, the insurance obstacle, as to who will bear the cost of insurance against disaster damage, which the Americans were raising earlier, has been resolved.
    • We have to build nuclear power to provide the initial feedstock for the thorium-based reactors.
  • No progress on trade pact: There are obviously differences between the two nations on the trade pact.
    • There is “progress”, but otherwise, we don’t know the way forward. Since the event was Ahmedabad-based, Amul is invading America and dairying is real politics.
  • US concerns over Kashmir issue: The US concern on Kashmir and minority rights is real.
    • If the largest foreign office establishment in the world is raising issues through their chief, let’s not bury our head in the sand.
    • Our defence minister expressing sadness at former chief ministers of Jammu and Kashmir being in detention was a gesture to the US President’s stand on pursuing solutions.
  • The bipartisan foreign policy of India shifting: The Americans generally rally behind the President on foreign policy.
    • We are more advanced now and have kicked a bipartisan approach to foreign affairs.
    • Seven decades of a bipartisan policy are thrown away without a word in explanation.

Challenges to the rights in India

  • Every right is tampered with. Your religion, your identity in a country that never questioned it, you name it, it’s in question.
  • Multiple identity cards not accepted: The Aadhaar card, passport, ration card, election card are not enough. One office doesn’t accept another’s card, even if they carry the same information.
  • A study on a ration card and election cards: A study funded by the Canadian IDRC showed the poor only keep under lock and key the ration and election cards. One saves them from starvation, the other gives them dignity. At least once every five years, the mightiest knock at their door. We must not destroy, we must build.

Conclusion

There are obviously differences between the two nations on the trade pact. But apart from trade, there are many areas the cooperation on which can benefit both the countries.

 

 

Foreign Policy Watch: India-United States

Blue Dot Network

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Blue Dot Network

Mains level : Blue Dot Network

 

With US President Donald Trump on his maiden visit to India, the two countries are expected to have discussed the Blue Dot Network, a proposal that will certify infrastructure and development projects.

Blue Dot Network

  • Led by the US’s International Development Finance Corporation (DFC), the Blue Dot network was jointly launched by the US, Japan (Japanese Bank for International Cooperation) and Australia (Department of Foreign Affairs and Trade) in November 2019 on the sidelines of the 35th ASEAN Summit in Thailand.
  • It is meant to be a multi-stakeholder initiative that aims to bring governments, the private sector and civil society together to promote “high quality, trusted standards for global infrastructure development”.
  • The network is like a “Michelin Guide” for infrastructure projects.
  • This means that as part of this initiative, infrastructure projects will be vetted and approved by the network depending on standards, as per which, the projects should meet certain global infrastructure principles.
  • The projects that are approved will get a “Blue Dot”, thereby setting universal standards of excellence, which will attract private capital to projects in developing and emerging economies.

Countering China’s BRI?

  • Observers have referred to the proposal as a means of countering China’s Belt and Road Initiative (BRI), which was launched over six years ago.
  • While Blue Dot may be seen as a counter to BRI, it will need a lot of work for two reasons.

Fundamental difference between BRI and Blue Dot

  • While the former involves direct financing, giving countries in need immediate short-term relief, the latter is not a direct financing initiative and therefore may not be what some developing countries need.
  • The question is whether Blue Dot offering first-world solutions to third-world countries.
  • Secondly, Blue Dot will require coordination among multiple stakeholders when it comes to grading projects.
  • Given the past experience of Quad, the countries involved in it are still struggling to put a viable bloc. Therefore, it remains to be seen how Blue Dot fares in the long run.

Foreign Policy Watch: India-United States

A U.S. strategy only meant to isolate China

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 2-Balancing India's interests in the light of US's strategy to contain China in the Pacific.

Context

Since 2017, the United States government has released a few reports and fact sheets on its new Indo-Pacific strategy. Buried in these documents is a much deeper agenda of the U.S. government: to use three large Asian states — Australia, India, and Japan — to isolate China. There is nothing else to it.

The scale of BRI and the US objections

  • Objections to BRI: The U.S. government has made it clear that what it finds most objectionable is China’s Belt and Road Initiative (BRI), which has signed on more than 70 countries in the world.
  • What BRI aims to achieve? Adopted in 2013, the BRI is intended as a mechanism to-
    • Development of new markets: BRI aims to end China’s reliance upon the markets of the West and to develop new markets in other continents.
    • Building infra: It is also intended to use China’s massive surpluses to build infrastructure in key parts of Africa, Asia, and Latin America.
    • Investment of $ 1.3 trillion: By 2027, according to estimates by Morgan Stanley, China will spend about $1.3 trillion on this ambitious construction project.
    • Involvement of Saudi Arabia: Even Saudi Arabia, a close ally of the U.S., has made the BRI one of the cornerstones of its Saudi Vision 2030 plan.
  • Involvement of Pakistan: While China has invested $68 billion to build the China-Pakistan Economic Corridor from Xinjiang to Pakistan’s Gwadar Port.
    • Saudi Arabia has agreed to invest $10 billion in the port itself.

Significance of the BRI and comparison with the US spending

  • Staggering scale and participation: The scale of Chinese investment, and the participation of a range of countries with different political identities in the BRI, is staggering.
  • Loss of appetite in the US to spend: At the Indo-Pacific Business Forum in July 2018 the U.S. said that it has spent $2.9 billion through the Department of State and the USAID (United States Agency for International Development).
    • It has lined up hundreds of millions of dollars more through its U.S. Millennium Challenge Corporation (MCC) and the Overseas Private Investment Corporation.
    • Inadequate US spending: If one adds up all the money that the U.S. intends to spend for economic projects, it is still a fraction of the amount spent by China.
    • ‘America First’ attitude: There is no appetite in Washington, D.C., with its ‘America First’ attitude, to funnel more money towards investments in the region currently being built by the BRI.

Military Claims of the US and investment

  • US investment with military presence: It appears as if U.S. investments will come only with military claims.
    • The case of Nepal: A few years ago, Nepal discovered a large amount of uranium in Mustang, near the Nepal-China border; this has certainly motivated U.S. interest in Nepal’s economy.
    • If the U.S. money comes with U.S. military presence, this will create a serious flashpoint in the Himalayas.

Raising human right and transparency issue against China

  • The argument of human rights and transparency
    • Rhetorical argument: Unable to outspend the Chinese, the U.S. government is making a rhetorical argument that it has more respect for “transparency, human rights, and democratic values” than China, which “practices repression at home and abroad”.
  • The argument of transparency and the debt trap
    • Debt trap used by the US: It is hard to imagine the U.S. being “transparent” with its trade deals. It is equally hard to imagine the U.S. being able to argue that it would not put countries into debt.
    • Debt crisis created by the US in the 1980s: The U.S. government enabled a massive Third World debt crisis in the 1980s, which was then used by the U.S.-driven International Monetary Fund’s Structural Adjustment Programs to strangle countries in Africa, Asia, and Latin America.
    • This history is alive, and it makes a mockery of the U.S.’s attempt to say that its own approach is superior to that of China’s.

US withdrawal from multilateralism

  • Apart from that, the U.S. government has already indicated that it is uninterested in multilateral deals.
  • Withdrawal from TPP: The US withdrew from the Trans-Pacific Partnership in 2017, for instance.
    • Australia and Japan shrugged, and then put their energy into the Regional Comprehensive Economic Partnership, which sidelines the U.S.

The claim of free and open Indo-Pacific

  • Renaming the Pacific Command: In May 2018, the U.S. military’s Pacific Command was renamed the Indo-Pacific Command, a symbolic gesture that provides a military aspect to the Indo-Pacific Strategy.
  • What free and open mean to the US? The U.S. government has made it clear that for all its talk of a “free and open Indo-Pacific”, what it actually wants is an Indo-Pacific with fewer Chinese ships and more U.S. warships.
  • Just before this renaming, the U.S. National Security Strategy of 2017 noted that “China seeks to displace the United States in the Indo-Pacific region”, and so the Indo-Pacific Strategy intends for the S. to fight for its dominance in the Pacific Ocean, the Indian Ocean, and in the Asian rim.
  • This is a very dangerous war that the U.S. seeks to impose on Asia.

India adopting the US project of Indo-Pacific

  • Australia and Japan moving away: As the military aspect of the Strategy increased, both Australia and Japan edged away from full-scale adoption of the U.S. project.
    • Japan has begun to use the term “Indo-Pacific” without the word “Strategy”.
    • Australia has signed onto a “comprehensive strategic partnership” with China.
  • Only India adopting the project: Only India remains loyal to the agenda set by U.S. President Donald Trump.
    • No US strategy to contain China: In all the documents released by the U.S. government and in all the speeches by officials, there is no discussion of the strategy to contain China.
    • There is only rhetoric that skates into the belligerent territory.

Conclusion

India would be advised to study the U.S. project rather than jump into it eagerly. Room for an independent foreign policy for India is already narrowed, and room for independent trade policy is equally suffocated. To remain the subordinate ally of the U.S. suggests that India will miss an opportunity to be part of a reshaped Asia.

 

 

Foreign Policy Watch: India-United States

Terms of transaction

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 2- India-US relations, contradictory impulses in the US policy and what future holds for India in the present scenario.

Context

Trump administration seems supportive of India as part of its Indo-Pacific strategy, while also counting gains for itself.

No substantive outcomes of the visit stated

  • Neither side has so far publicly touted any major substantive outcomes of the visit.
  • Creation of positive atmosphere: To create some positive atmospherics, the Indian Cabinet Committee on Security just gave final approval to $3 billion worth of pending contracts to purchase military helicopters from US companies Lockheed Martin and Boeing.
    • Missile defence system sale: The US Administration, on its part, informed Congress of its willingness to authorise the sale of another $1.8 billion worth missile defence system.
    • The move is indicative of the US’s growing willingness to allow higher technology defence equipment to India.
  • Placing India at level (STA-1) similar to its closest allies: The Trump Administration has gone farther than its predecessors in the technology levels it is willing to offer.
    • Including Guardian drones in 2017, and placing India at STA-1 level, similar to its closest allies and partners.
  • The expected MoUs: The spokesperson of the Ministry of External Affairs indicated on February 20 that five MoUs can be expected, inter alia,-
    • On intellectual property.
    • Trade facilitation and
    • Homeland security.
  • Making sense of the US’s actions in the present context: There will also be the regulation joint statement.
    • Analysing in greater details: This time, the statement will be parsed in more than usual detail for indications of future direction and intent for the partnership.
    • It is the time when the US has been talking of “Make America Great Again”, advocating for sovereignty and nationalism.
    • The US is also decrying-Alliance commitments, Readying to sign an agreement with the Taliban by month-end leading to a drawdown of US troop presence.
    • Yet, it is articulating repeatedly about India being a lynchpin of its “Free and Open Indo-Pacific Strategy”.

No development on the limited trade front

  • No progress on limited trade package: The two countries have not been able to finalise even a “limited trade package”, which has been under discussion for two years.
  • Gaps between the expectations: Obviously, there is a gap between what India can accommodate, and what the US negotiators want for their own political reasons.
  • The Trump administration has taken several steps that have negatively impacted India.
    • It has imposed additional tariffs on steel and aluminium imports from India, ostensibly on national security grounds.

Contradictory impulses

  • The above action flies in the face of citing strategic partnership and convergence in Indo-Pacific strategy.
  • GSP withdrawal: It has withdrawn hitherto available GSP benefits from certain categories of labour-intensive Indian products.
  • Labelling India a ‘Developed’ country: The US has taken India out of its list of “developing” countries, lowering the threshold for countervailing trade action.
  • Against the spirit of the beneficial rise of India: These actions go against the grain of the US articulation that it sees the rise of India to be in US benefit.
    • Treating the trade deficit with China and India on equal footing: It also does not make sense when India is an overall trade deficit country.
    • Even though it has a $20 billion surplus with the US which pales compared to China’s $350 billion surplus.
  • Unprecedented actions against the closest allies: Trump has taken unprecedented action against the closest US allies.
    • He has also repeatedly publicly ridiculed Indian tariffs, claiming recently that India has not treated the US fairly.

What the future holds for the India-US relationship

  • Is the US “all-weather” partner: Given the contradictory impulses, it would be fair to ask what the future holds for the India-US relationship, and where would the Trump visit and its aftermath take us.
    • Can India consider the US a reliable and “all-weather” partner, or be constantly juggling convergences and divergences?
  • The factors that affected relationship: Historically, four factors have affected the India-US relationship at any point of time:
    • US global posture and priorities.
    • Strength of bilateral relations.
    • The role assigned to Pakistan in its global objectives.
    • The strategy towards China.

Evolution of India-US relationship

  • Under Democrat Presidents
  • Roosevelt Period: During the Second World War, Roosevelt pushed Britain to grant independence to India, facilitated a separate official Indian representation in Washington through an Agent-General since 1941.
    • But did not go far enough fearing disruption of the necessary wartime alliance. In the post-war period.
  • Truman Period: Truman spoke of partnering with developing countries for their industrial and scientific progress.
    • He welcomed Indian PM Nehru for an acclaimed visit in 1949.
    • But initiated the Cold War containment strategy against the Soviet Union, and the assessment of newly independent countries from that lens.
  • Kennedy Period: He was extremely supportive of democratic India’s economic assistance requirements, and for military assistance during the 1962 China conflict.
  • Carter Period: Carter, wedded to human rights issues, acclaimed India’s post Emergency elections.
    • But was critical on non- proliferation differences.
  • Clinton Period: Clinton stabilised the relationship after the dissonance and sanctions following our 1998 nuclear tests.
    • And gave full support to India’s position during the 1999 Kargil conflict with Pakistan.
  • Obama Period: He came out in support of India’s permanent membership of the UN Security Council, and declared India a Major Defence Partner, enabling higher-level technology authorisations.
  • Under Republican Presidents
  • Eisenhower Period: Eisenhower embraced and armed Pakistan in its CENTO and SEATO military alliances.
    • India as a bulwark against China: He emphasised food and economic assistance to India seeing it as a democratic bulwark against a Communist China.
    • First-ever visit to India by the US president: He made a successful first-ever visit of a serving US President to India, welcomed also by a 5 lakh crowd in Connaught Place.
  • Nixon Period: He visited India for a day in 1959, was upset with Indian criticism of his Vietnam military offensives.
    • Sided completely with Pakistan during the Bangladesh crisis of 1971.
    • He sent the US seventh fleet into the Bay of Bengal to pressurise India and sought to reorder the global balance by outreach to China through a secret Kissinger visit that year.
  • Reagan Period: He explored economic and scientific cooperation with India, but was absorbed with Pakistan’s support in pushing the Soviet Union out of Afghanistan.
  • George W Bush Period: George W Bush transformed the relationship with the civil nuclear cooperation agreement of 2008.
    • Perceiving again the technological, military and political challenge to the US from a rising China.

Conclusion

It is clear that India’s interests have been impacted a bit by party orientation on issues, but more by the overall global circumstance. Under the present circumstance, therefore, India will have to deal with a transactional administration, supportive of strengthening India as part of its Indo-Pacific strategy, but also counting the gains for itself.

 

Foreign Policy Watch: India-United States

An agenda for Modi-Trump

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3-Security cooperation with the US, security concern for India over the US withdrawal from the Middle East.

Context

With the withdrawal of the US from Afghanistan and other regions, India must think about its new role in the region.

The US plans for Afghanistan and the Gulf-cause of concerns for India

  • Why it matters? Prime Minister Narendra Modi will be eager to get a first-hand briefing from the US President on his plans for the Af-Pak region and the Gulf.
    • These two regions are vital to India’s economic, political and military security.
  • End of an important era in northwestern frontier: The impending withdrawal of US forces from Afghanistan and the downsizing of the American security role in the Gulf region mark the end of an important era in India’s northwestern frontiers — both land and maritime.
  • Can India overcome the past reluctance? The question is whether Modi and Trump can overcome the past reluctance in both capitals to collaborate in the regions west of India.
    • Suitable for both the countries: There is a good fit between-
    • America’s downward adjustment in the region under Trump, and-
    • India’s ambition to play a larger role in the Gulf and the Indian Ocean.

Broad understandingIndo-Pacific and extending it to the West

  • Development in the last three years: Over the last three years of the Trump presidency, Delhi and Washington had developed a broad understanding of how to secure the Indo-Pacific that the US had defined.
  • Need to extend the same to Western Indian Ocean: Officials in Delhi frequently complained that these common perspectives did not extend to the Western Indian Ocean.
  • In recent weeks, though, senior US officials have said the Indo-Pacific region extends to the east coast of Africa.
    • Question of strategic cooperation: Extending Indo-Pacific is not a question of defining geography but finding ways to secure common ground through strategic cooperation.

Elevation of South West Asia to the top of America’s security concerns

  • Filling the vacuum created by the British Empire: As the sun set over the British empire in the east after a century and a half, the US stepped in to fill the breach.
    • What began as a cautious entry into the Indian Ocean became a full-blown military power projection at the end of the 1970s.
  • Other events that played an important role? The dramatic rise in oil prices, the Islamic Revolution in Iran and its threat to export it to the Arab World, and the Soviet occupation of Afghanistan, saw the elevation of South West Asia to the top of America’s security concerns.
  • Events after Gulf War: The First Gulf War during 1990-91 saw the US intervene to restore the sovereignty of Kuwait that was swallowed by Iraq’s Saddam Hussein.
    • 9/11 attacks: The terror attacks on September 11, 2001, invited a ferocious response from the US that ousted the Taliban from power in Afghanistan.

The Iraq and Afghanistan war-Endless wars

  • Costly failures: Notwithstanding the initial successes in both Afghanistan and Iraq, there is a growing consensus in the US that these occupations have been costly failures.
    • Trump has been among the first political leaders in the US to call these wars initiated by a Republican predecessor in the White House as “stupid”.
    • The promise of ending the endless wars: During his presidential campaign in 2016 and since Trump has promised to end the “endless wars” in the Greater Middle East and bring the boys back home.
    • It is an idea that has found considerable resonance among Democrats.
  • Focusing on great power competition instead of small wars: While the security establishment is not willing to give up, US is now focusing more on the great power competition with Russia and China than the small wars that had preoccupied it over the last three decades.
  • The Oil factor: The steep decline in US energy dependence on the Gulf, too, has reduced the salience of the region in Washington.

Three consequence of the change in the US policy

  • Cutting down the military commitments
    • The Middle East and Africa: Trump has been cutting down military commitments in the Middle East and Africa.
    • His officials are about to sign an agreement with the Taliban that provides for American withdrawal from Afghanistan.
    • Maritime front: On the maritime front, Trump has called on all major powers, especially those importing oil from the Gulf, to contribute to the security of shipping in the Strait of Hormuz.
  • How it matters for India?
    • Challenges of limiting the consequences: The challenge for Indian policymakers has been to limit the consequences of what seems a definitive turn in US policy.
    • Chance to extend the own role: It should also be about seizing the possibilities for expanding India’s own role in the western marches of the Subcontinent.
  • To expand its role Delhi needs to make a few important shifts in its own thinking.
    • One, it must overcome the still powerful belief in sections of the Indian establishment that the US-Pakistan relationship is unchanging.
    • The US tilt toward India and away from Pakistan: Over the last two decades, there has been a tilt in US policies away from Pakistan and towards India.
    • For instance, the US pressures on Pakistan to vacate the Kargil heights, an exclusive nuclear exemption to India and efforts to rein in Pakistan’s cross-border terrorism during the Obama years.
    • Support in Trump period: Trump went further to acknowledge that Pakistan is part of the problem in Afghanistan and turned up the heat on Pakistan’s support for terrorism.
    • He has supported India’s efforts at the UNSC to bring Masood Azhar to book in the face of Chinese resistance.
    • Helped India isolate Pakistan at the Financial Action Task Force.
    • Prevented the UNSC from discussing Kashmir.
    • But India must also recognise: That there will be a measure of cooperation between the US and Pakistan.
    • Delhi’s focus should, instead, be on expanding its own security cooperation with the US in the troubled lands to the west of India.
  • India needs to prepare for a larger security role in Afghanistan
    • Question of being at the next-door: Trump has been asking a simple question: If India is next door to Afghanistan, should it not be doing more for Afghan security?
    • Need to explore the options: The NDA government has stepped up security assistance to Kabul. As Afghanistan enters a turbulent phase, regional and other powers are bound to fill the vacuum left by the US.
    • There are many options–  between doing nothing and sending the Indian army into Afghanistan- that Delhi and Washington could discuss.
  • Need to increase Naval activity
    • Increased role as regional security provider: Delhi has already stepped up its naval activity within the Gulf and beyond as part of its emergence as a regional security provider.
    • Cooperation with others: Effectiveness of India’s role will rise manifold if it acts in concert with the US and other partners.
    • Modi and Trump could begin by laying the political foundation for such cooperation.

Conclusion

At the beginning of Trump’s term, sceptics dismissed the prospects for India-US security cooperation in the eastern Indian Ocean and the Pacific, but progress has been steady. That cooperation can and must be extended now to the Western Indian Ocean.

 

Foreign Policy Watch: India-United States

Forging a new India-U.S. modus vivendi

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 2-India-US, Importance for India, issues involved.

Context

It is clearer than perhaps ever before in recent times, that New Delhi needs the continued support of the U.S. government on almost everything substantial that matters to India in its quest to be a power of substance in the international system.

Preparing for Trump 2.0

  • The world may have to deal with Mr Trump for four more years after the end of his present term this year.
  • Where India can benefit from constructive ties with the US?
    • A fairer trade regime.
    • Accessing cutting-edge technology.
    • The fight against terrorism.
    • Stabilising our region.
    • New Delhi stands to benefit from constructive ties on all issues, given a more sensitive United States.
  • India must, therefore, seek greater understanding and engagement should there be a Trump 2.0.
  • Understanding the asymmetrical partnership: Asymmetrical partnerships, as we know from history, are rarely easy.
    • Partnership with the superpowers: Partnerships with superpowers are even more difficult; in international politics, as in life, even the best of unequal relationships results in a loss of some dignity and autonomy. 

Why the partnership with the US matters for India?

  • The growing influence of China in Indo-Pacific: Without the United States, the region could become willy-nilly part of a new Chinese tributary system.
    • Chance of more organic rule-based order: With a fully engaged United States, the region has at least the chance of creating a more organic rules-based order.
  • Past consequences for India: the history of “estrangement” with the United States, during the Cold War, has had consequences for vital national interests that continue to cast their shadow on the present.
    • Jammu and Kashmir (J&K).
    • Nuclear non-proliferation.
    • Festering of the Pakistan “problem”.
    • The Chinese humiliation of 1962, are just a few examples.
  • Change in the perception over the US: But much of course has changed today.
  • AntiAmericanism is outdate: Anti-Americanism, once the conventional wisdom of the Indian elite, seems outdated.
    • Close alignment with the US: New Delhi has, over the decades, gone on to align itself more closely with Washington.
    • Opinion in favour of the stronger ties: More important, both within India and in the U.S., the consensus across the mainstream of political opinion favours stronger relations between the two countries.

Pro-US tilt of the Indian Foreign policy

  • A survey suggests support for Trump: According to the latest Pew Surveys of Global Opinion, support for Mr Trump in India is high enough to suggest a great deal of public affection for the American President.
    • That itself is a marker of the way India and Indians now see the world.
  • Reason for the change in geo-strategic change: The reason for the change in New Delhi’s geostrategic outlook can be summarised quickly.
    • If the 1971 Friendship Treaty with the Soviet Union was a response to the continuing U.S. tilt towards Pakistan and the beginnings of a Washington-Beijing entente.
    • China factor: At present, it is the prospect of a potentially hegemonic China in the Indo-Pacific region is helping to cement the relationship.
    • Beijing has managed to alienate nearly all its neighbours and allies, except North Korea and Pakistan.
  • Gains made in bilateral ties in the last 3 years:
    • COMCASA– A foundational military agreement that allows for the sharing of encrypted communications and equipment.
    • Export control law relaxation: A change in U.S. export control laws that places India in a privileged category of NATO and non-NATO U.S. allies;
    • 2+2 dialogue: New ‘2+2’ foreign and defence ministers dialogue.
    • Oil export to India: An exponential increase in U.S. oil exports to India.
    • Tri-lateral military exercise: The inauguration of the first India-U.S. tri-service military exercise and expansion of existing military exercises.
    • The signing of Industrial Security Annex: The signing of an Industrial Security Annex that will allow for greater collaboration among the two countries’ private defence industries.
    • Inclusion of India in a U.S. security Initiative: The inclusion of India and South Asia in a U.S. Maritime Security Initiative.

Preparing for the President from Democratic Party

  • There is, of course, a chance that we may have a Democratic President next year.
  • Bipartisan support in the US: In those circumstances, we can only hope that the bipartisan consensus on engaging India will prevail.
    • To be sure, however, a new President will seek to put his/her own imprimatur on the relationship.
    • Democrats and the Human Right issue: The Democrats will clearly be more proactive on human rights and on issues of inclusion and diversity, which would make a greater demand on India and test its capacity and creativity.
  • Indian diaspora: India, of course, continue engaging with its strongest source of support in the United States: the Indian diaspora.
    • Fortunately, there is a near consensus on the need to strengthen this constituency.

Conclusion

In any case, there is little doubt that whoever is the next occupant of the White House, a retreat from multilateralism (especially on trade-related issues) and concern about China will continue to be the two main pillars of contemporary American foreign policy. If for only those reasons, Mr Trump’s reason has undeniable significance.

 

 

 

Foreign Policy Watch: India-United States

Why trade with the US matters to India?

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not Much

Mains level : India-US trade disputes

 

Context

  • US President Trump arrives in India months after he went on stage with PM Modi at the ‘Howdy Modi’ event in Texas.
  • Both countries have repeatedly resolved to strengthen trade ties — however, attempts at working out a short-term agreement have fallen apart in the past, and tensions have risen over tariffs.
  • The US often accuses India of taking decisions over the previous few years that prevented “equitable and reasonable access” for Americans to its markets.
  • Let’s have a look at the current state of play:

Why trade with the US matters to India?

  • India’s existing and stalled bilateral free trade agreements (FTAs) started to receive attention from the government last year, even as the country worked to conclude the seven-year negotiations to join the RCEP, the world’s “largest” regional trade pact.
  • But by backing out of the RCEP in November, India shut the door on the large “integrated market” that the deal was offering.
  • Instead, it increased the pressure on itself to strengthen existing separate trade agreements with each member of the RCEP bloc.
  • Without these, it may not be able to tap a sizeable portion of the global market; also, it may not be able to easily access the products and services of these countries.

Need for more bilateral activities

  • In the backdrop of the global economic slowdown, where India’s global exports have fallen consistently, it is important for the country to diversify and strengthen bilateral relations with other markets.
  • It has set its sights on “large developed markets”, improved access to which would help its industry and services sectors.
  • These include the US, which has, over the last two decades, become a crucial trading partner in terms of both goods and services.

Trump’s advent

  • In March 2017, soon after taking office with election campaign focussing on “making America great again”, Trump ordered “first-ever comprehensive review” of trade deficits of the United States.
  • India was among the countries that exported more to the United States than it imported, and the latter was left with a trade deficit of over $21 billion in 2017-18.
  • While the US’s deficit with India is only a fraction of its deficit with China (over $340 billion in 2019), American officials have repeatedly targeted the “unfair” trade practices followed by India.
  • These include the tariffs that India imposes, which the Trump administration feels are too high — and over which the President has personally called New Delhi out on several occasions.

Locating the main sticking points

  • Negotiations on an India-US trade deal have been ongoing since 2018, but have been slowed by “fundamental” disagreements over tariffs subsidies, intellectual property, data protection, and access for agricultural and dairy produce.
  • The office of the US Trade Representative (USTR) has underlined India’s measures to restrict companies from sending personal data of its citizens outside the country as a “key” barrier to digital trade.
  • The US wants India to strengthen patent regulations, and to ease the limitations American companies investing in India face.

India’s tariffs

  • India is a “tariff king” that imposes “tremendously high” import duties, Trump has complained repeatedly.
  • The health cess on imported medical devices announced in the Budget for 2020-21 too, is seen as a negative for the American side, as the US is among the top three exporters of these categories of products to India.
  • However, India is working to finalise a proposal to move from caps on prices of medical devices to limiting the margins of those involved in the supply of the products.

Agri sector

  • The US has long demanded greater access for American agriculture and dairy products.
  • For India, protecting its domestic agriculture and dairy interests was a major reason to walk out of the RCEP agreement.

US retaliation

1) Tariff on steel

  • In 2018, the US imposed additional tariffs of 25% on steel and 10% on aluminum imports from various countries, including India.
  • While India’s government claims the impact is “limited”, they brought down the US share in India’s steel exports to 2.5% in 2018-19 from 3.3% in 2017-18.
  • In March 2018, India challenged the US decision at the World Trade Organization (WTO).
  • India held off on imposing retaliatory tariffs until the US struck again — by removing it from a scheme of preferential access to the American market.

2) GSP axe and response 

  • In June 2019, the US decided to terminate India’s benefits under the Generalized System of Preferences (GSP) scheme, which provides preferential, duty-free access for over $6 billion worth of products exported from this country to the US.
  • The decision followed a warning earlier that year, after negotiations on a potential trade agreement had broken down.

3) Labelling India as developed country

  • India was the largest beneficiary of the US GSP programme.
  • While duty-free benefits accrued to only around $200 million for the billions of dollars worth of exports, India is understood to have asked for restoration of these benefits in the ongoing trade negotiations.
  • Most recently, the USTR classified India as a “developed” country based on certain metrics. It is not clear whether the upgrade from “developing” will impact the restoration of benefits under the GSP scheme.

The WTO tussle

  • India is one of the largest importers of almonds from the US, having imported fresh or dried shelled almonds worth $615.12 million in 2018-19.
  • Imports from the US of fresh apples stood at $145.20 million, of phosphoric acid at $155.48 million, and of diagnostic reagents at nearly $145 million that year.
  • Removal from the GSP list amidst rising trade tensions prompted India to finally impose retaliatory tariffs on several American imports, including almonds, fresh apples, and phosphoric acid.
  • This was a significant move — and the US approached the WTO against India.

Whats’ next?

  • US administration appeared to suggest that while no deal was imminent, work on a longer-term agreement was progressing well, and that his personal chemistry with Prime Minister Narendra Modi might help.
  • India and the US could begin with some “low-hanging fruit” to indicate their willingness for a deeper economic commitment.
  • This includes the US reinstating India’s benefits under the GSP programme, and India doing away with duties on motorcycles.

Foreign Policy Watch: India-United States

When Yankee goes home

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 2- Changing India-US relation dynamics in the new global order.

Context

Delhi needs to unlearn some of the assumptions about US policy as it prepares to host Trump next week. While the diaspora is important and could be of some value in dealing with Trump, it can’t override the deeper forces animating American politics.

Changing America under Trump

  • Restriction on immigration: Trump’s America wants the Americans to come home but is shutting the door on unrestricted immigration from the rest of the world.
    • Domestic critics say America has been a nation of immigrants and Trump is wrong to keep them out.
    • Why the restriction on immigrants? But Trump has much support among the working people who know-
    • Immigration keeps wages low.
    • Helps the capitalist class and-
    • Disrupts the familiar cultural and social landscape.
  • Some want America out
    • Some chancelleries in the world demand that America must go home.
    • The president of the Philippines wants to end Manila’s century-old relationship with the US military.
    • Iran wants America out of the Gulf.
    • Russia and China would like to see the US forces out of Europe and Asia respectively.
    • The world is paying serious attention to the possibility of Yankee going home.

Downsizing of the US role and how the world is responding?

  • Downsizing
    • In the Gulf, Trump wants the Asian powers to police the vital sea lines of communication.
  • In Europe and Asia, he wants the allies to do more for their own security.
  • How the world is responding?
    • Europe’s response In Europe, France and Germany are now talking about creating new defence capabilities for the European Union amidst the prospect for American security retrenchment.
    • How the Asian countries are responding? In Asia, Japan is debating a larger security role.
    • In the Gulf, America’s Arab allies are scrambling to diversify their security dependence.

America First policy

  • What is America First policy? The idea of downsizing America’s role, along with the rejection of free trade and open borders, is at the very heart of Trump’s America First policy.
  • Resistance to the policy: To be sure there is deep resistance in the US to these ideas that run counter to America’s post-war internationalism.
    • Wall Street on the East Coast and Silicon Valley on the West Coast along with the old foreign and security policy establishment in Washington all oppose Trump’s America First focus.
  • Widespread support to the policy: Trump’s message, however, resonates across the political divide in the US.
    • Many candidates for the presidential nomination of the Democratic Party agree with Trump’s goal of ending America’s “endless wars” in the Middle East.
    • Many in the working classes, who traditionally supported the Democrats, believe Trump is right in arguing that free trade has hollowed out American industry and eliminated manufacturing jobs.

How the changes matter for India?

  • Prepare for the changes: America is at an inflection point; India needs to come to terms with the profound changes unfolding in the US.
  • No intervention policy: The Indian political classes castigated the US for excessive interventions in the affairs of other nations.
    • Trump now says such interventions are counterproductive and all nations must strengthen their sovereignty.
  • Critical of globalisation: Indians criticised the US for imposing globalisation on others; the US President is now one of the biggest critics of globalisation.
    • Trump’s America is not the one we have known.
  • India’s sensitivity to the US domestic politics: As India broadened its engagement with America in the last two decades, Delhi has become more sensitive to the US domestic political dynamics.
    • In getting the US to ease off on Kashmir and nuclear issues, Delhi had to look beyond the foreign policy establishment to generate better US appreciation of India’s concerns and interests.
  • Indian diaspora: One of the instruments that came in handy was the mobilisation of the Indian diaspora, it emerged as a key factor in elevating the bilateral relationship in the 21st century.
    • While the diaspora is important and could be of some value in dealing with Trump, it can’t override the deeper forces animating American politics.

Conclusion

Delhi’s success with the US will depend on the kind of strategic imagination it can display on trade cooperation, securing Afghanistan after America’s withdrawal, stabilising the Gulf and developing a new global compact on migration that is sensitive to domestic political considerations and yet contributes to the collective economic development.

 

 

 

 

Foreign Policy Watch: India-United States

Hype Trumps Hope

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 2- India-US relation in changing circumstances.

Context

US president’s visit comes when a mutually beneficial framework of bilateral relationship stands disrupted.

Significance previous U.S. President’s visits

  • The Clinton visit:  The Clinton visit occurred against the backdrop of a new assessment within the American strategic community of India’s potential role in the post-Cold War era and against the backdrop of the rise of China.
    • Recognition of India’s nuclear power: He implicitly recognising India’s nuclear power status.
    • Kashmir issue: He suggested that the line of control (LoC) between India and Pakistan should be viewed as the international border so as to bury the “Kashmir issue” forever and-
    • Visas for Indians: increasing entry visas for Indians that has since contributed to the emergence of a sizeable community of Indian Americans.
    • As a counter to China: It was suggested that the rise of democratic India would be in the interests of the US and so the latter ought to be supportive of the former.
  • The Bush visit:
    • Political context: The rise of China and of radical Islam and jihadi terrorism provided the geopolitical context.
    • Economic context: The growth of an increasingly open Indian economy provided the economic context.
    • Cooperation in civil nuclear energy: Influenced by this new thinking, President George Bush took the next steps in strategic partnership and led the initiative to promote cooperation in the field of civil nuclear energy that also explicitly recognised India as a nuclear weapons power.
    • As heads of state, Clinton and Bush altered US-India bilateral relations in a fundamental way.
  • The Obama visit:
    • P2P relation: His second visit was more a recognition of the growing importance of people-to-people (P2P) relations and
    • Defence sales to India: The visit also aimed at promoting defence sales to India.
    • During the nuclear deal negotiations, US Congresspersons would often suggest that it was a “123 for 126” deal — that is, they would vote in favour of the 123 agreement in Congress in the hope that India would buy 126 fighter jets from the US.
    • That hope remains as yet unfulfilled, with the French getting the Rafale deal and no decision taken on the purchase of US fighter jets.

America First policy of Trump

  • The credit for laying the foundation for a new and supportive post-Cold War relationship between the US and India goes singularly to President Bush.
  • Disruption with the arrival of Trump: The mutually beneficial framework that Bush helped create to promote the bilateral relationship has been rudely disrupted by the arrival of Donald Trump in Washington DC.
    • End of GSP: Trump’s “America First” policy offers no space for offering India “special and differential” treatment on any front, least of all trade.
    • Status of the Indian economy from the US perspective: With per capita annual national income of US $60,000, Trump’s America has no qualms declaring India, with a per capita annual average national income of US $2,000 a “developed economy” not deserving of any leniency in trade policy.
    • Clubbing together with China: To club China, a $15-trillion economy, with a $3-trillion India on the trade front is not just stupid but an affront to Indian sensibilities.

What are the hopes and what could be the outcomes of the visit?

  • No bi-partisan support to India’s rise: It has to be recognised that neither Democratic liberals nor Republican conservatives are any longer willing to be supportive of the Bush-Rice paradigm that views India’s rise in benign and mutually beneficial terms.
    • Inward-orientation in both the countries: Today the relationship seems caught in the pincers between the inward-orientation of rightwing nationalists in both nations.
    • No hope of change: There is no reason as yet to believe that this unfortunate state of affairs will be altered by the Trump visit next week.
  • Stand on Pakistan or Kashmir: Trump has also moved away from the Clinton-Bush framework on India-Pakistan relations and moved closer to approach of wanting to insert the US into the equation on Kashmir.
    • Appeasement of Pakistan: Trump’s motives are no different from those that initially drove Obama-namely, to appease Pakistan in the hope of securing a peaceful exit from Afghanistan.
    • Expect differences to persist: At best, India can hope to limit the damage Trump may do to strategic stability in the region.
  • Visa and investment: There will be much talk about US investments in India and increased visas for Indians going to the US.
    • Corporate interests: Both are driven largely by US corporate interests.
    • Given the direction of the Modi government’s trade policy, one cannot expect any dramatic concessions being made.
    • Defence purchases: The best India can do for the US is to buy more defence equipment and ease up on some trade restrictions.
    • Defence sales to India are an essentially commercial activity and much of it can go on even in the absence of strategic convergence and shared geopolitical perspectives.
  • Brain-drain and need to focus on education: Much is made of Indian Americans heading US multinationals and the Great Indian Diaspora in the US.
    • Outmigration of talent: The continued neglect of education in India is increasing the outmigration of talent, offering the US a reservoir of talent.
    • Drain on national resources: While the Indian elite celebrates this out-migration, the fact is that it is a drain on national resources.

Conclusion

In sum,  with the supportive Bush-Rice doctrine defining the post-Cold War US-India partnership virtually abandoned, and the new Trump doctrine treating India as a “developed” economy, demanding parity on trade, bilateral relations have become uncertain and testy. To hide the lack of substance in the relationship the Trump visit will focus on the hype and Prime Minister Modi has perfected the art of diplomacy as mass entertainment.

 

 

Foreign Policy Watch: India-United States

USTR takes India off developing country list

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Countervailing duty

Mains level : India-US trade disputes

 

The Office of the United States Trade Representative (USTR) has published a notice, amending lists of developing and least-developed countries that are eligible for preferential treatment with respect to countervailing duties (CVD) investigations.

New classification by US

  • To harmonise U.S. law with the World Trade Organization’s (WTO) Subsidies and Countervailing Measures (SCM) Agreement, the USTR had, in 1998, come up with lists of countries classified as per their level of development.
  • These lists were used to determine whether they were potentially subject to U.S. countervailing duties. The 1998 rule is now “obsolete” as per the USTR notice.
  • Countries not given special consideration have lower levels of protection against a CVD investigation.
  • A CVD investigation must be terminated if the offending subsidy is de minimis (too small to warrant concern) or if import volumes are negligible.
  • The de minimis thresholds and import volume allowance are more relaxed for developing and least-developed countries.

Criteria set by US

  • The USTR used the following criteria to determine whether a country was eligible for the 2% de minimise standard:

(1) Per capita Gross National Income or GNI

(2) share of world trade

(3) other factors such as Organisation for Economic Co-operation and Development (OECD) membership or application for membership, EU membership, and Group of Twenty (G20) membership.

Delisting India

  • India was, until February 10, on the developing country list and therefore eligible for these more relaxed standards. It has now been taken off of that list.
  • India, along with Brazil, Indonesia, Malaysia, Thailand and Vietnam were taken off the list since they each have at least a 0.5% share of the global trade, despite having less than $12, 375 GNI (the World Bank threshold separating high-income countries from others).
  • India was taken off the list also because — like Argentina, Brazil, Indonesia and South Africa — it is part of the G20.
  • Given the global economic significance of the G20, and the collective economic weight of its membership (which accounts for large shares of global economic output and trade), G20 membership indicates that a country is developed a/c to USTR.

Foreign Policy Watch: India-United States

[op-ed of the day]Spotting an opportunity in changing fundamentals

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2-Effects of politics and policies of developed and developing countries on India's interest, Indian diaspora.

“Phase one” of the trade deal between the U.S. and China notwithstanding, the ongoing dispute between the U.S. and China and other changing scenarios could turn out opportunities in various forms for India.

Oil prices windfall

  • Slack demand and increased production by the U.S., had lowered oil prices which was good news for India.
  • It could also help India address its current account deficit.
  • But oil prices have surged more than 4% following the killing of Iranian general by the U.S.
  • An outbreak of hostilities could send the oil prices soaring.
  • India’s energy import from the U.S. is likely to touch $10 bn by 2019-20.
  • While China is increasing its stake in Saudi Aramco- one of the largest oil production company in the world.
  • China is also increasing its ties with the other oil producers which gives China the opportunity to increase its naval presence in the Indian Ocean increasing the Strait of Hormuz.

On trade front

  • According to the State Bank of India report-Ecowrap, India has scarcely benefited from the trade war.
  • Of the $35bn decline in China’s export to the U.S. $21bn was diverted to the other countries and the rest $14bn was made good by the U.S. producers.
  • India contributed only $755-million of this diversion.
  • The U.S. tariff made some other players-Mexico, Taiwan, Vietnam even more competitive.
  • China is facing pork shortage but India exports pork indirectly through Vietnam, increasing its cost and reducing market share.
  • China’s thrust on the AI, robotics, autonomous vehicles, and space technology has raised the U.S. suspicion, raising the prospects of high-tech war.
  • The big three Chines high-tech companies, Baidu, Alibaba, and Tencent together invested $5bn in India.
  • India could use this opportunity to insist China open its market for the IT sector and other tech exports.
  • India has allowed all the players including Huawei to participate in the 5G trials but the outcomes are far from over.
  • With all that said, the U.S.-China tensions drive supply chains out of China, with the right policies as Vietnam has done, India could emerge as an alternative destination.
  • Restriction by the U.S. on  China could lead to difficulties in reducing emissions and mitigate climate change in China.
  • Restrictions on technology export often lead to an increase in domestic research.
  • So, China could succeed in developing all the technologies that are denied to it by the U.S. under the restrictions.
  • With the protests in Hong Kong showing no signs of abating, India may have to cater to refugees of Indian origin if things turn uglier.

Key regional issues

  • The situation in the South China Sea is in favour of China as it already has occupied several of them.
  • Though India is a member of “Quad” dialogue on border issues, it has no role in negotiating the “Code of Conduct” with the ASEAN.
  • On the connectivity issues, the U.S. position is helpful for India. Recently the U.S. criticised China-Pakistan Economic Corridor.
  • India is not a member of the Indo-Pacific Business Forum created by the U.S., Japan, and Australia.
  • India is also not a member of Blue Dot network created by the U.S., Japan, and Australia.
  • In future India might have to reconcile its regional connectivity issues with BRI projects that have mushroomed in the region.
  • On the ideological fronts, China is so emboldened by its economic success that it seeks to challenge the liberal democratic model and offers an alternative based on its own system.
  • India might have to contend with the greater Chinese presence in the Asia-Pacific theatre.

Conclusion

India’s relations with the U.S. and Chinas growing influence in economic as well as all the other sphere represents multiple challenges for India and are likely to grow in the future.

Foreign Policy Watch: India-United States

[op-ed snap] Cracks in the relic: on U.S.-Turkey relations

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing much

Mains level : NATO disintegration

Context

Rising tensions in U.S.-Turkey relations are threatening to upset the North Atlantic Treaty Organisation (NATO) unity.

Recent Incidents: US-Turkey

    • In the latest of a series of incidents, Turkish President Recep Tayyip Erdoğan has threatened to shut down two U.S. bases in retaliation for the proposed American sanctions on Ankara over purchasing Russian weapons.
    • The U.S. and Turkey are the largest and second-largest standing armies of NATO.
    • There are U.S. nuclear warheads in the Incirlik airb̥ase, a critical facility for American operations in West Asia.
    • Mr. Erdoğan has warned that Incirlik and the Kurecik radar base would be shut if there are sanctions.
    • U.S.-Turkey ties began slumping in recent years after Washington’s refusal to extradite Fethullah Gülen, a U.S.-based Turkish Islamic preacher who is accused by Ankara of orchestrating the failed 2016 coup against Mr. Erdoğan. 
    • The U.S. decision to arm and assist Kurdish rebels in Syria against the Islamic State was another blow. 
    • Ankara sees the People’s Protection Units, the main Syrian Kurdish militia that became an American ally in the anti-IS war, as an affiliate of the Kurdistan Workers Party, the Kurdish militia on the Turkish side.
    • Russia – Turkey moved closer towards Russia, now trying to raise its regional profile, and invaded Kurdish-held towns in northern Syria earlier this year. Turkey’s decision to purchase the Russian S-400 missile system despite U.S.-NATO opposition was the tipping point.

NATO

    • After the disintegration of the Soviet Union, NATO remained as a vehicle of western military might and continued to expand to Russia’s borders.
    • This created tensions between Russia and the West in the recent past. 
    • With the resurgence of populist, nationalist leaders in several western countries, NATO’s relevance has been called into question several times.
    • Fast-deteriorating ties between the U.S. and Turkey is adding to the crisis. 
    • The Trump administration has already suspended Turkey from the F-35 program, citing concerns over Russia spying on the fighter jet’s capabilities using the S-400 system’s radar. 
    • The U.S. Senate Foreign Relations Committee approved a Bill seeking sanctions on Turkey over the S-400 purchase and the Syria offensive. 
    • Turkey seems determined to go ahead with the S-400 deal and even buy advanced Russian aircraft if the U.S. does not deliver the F-35s. 
    • With threats to shut down Incirlik and Kurecik bases, it is now clear that the cracks are wide open. 

Conclusion

The question the Atlantic alliance faces in this hour of crisis is not just whether the U.S. and Turkey would manage to resolve their differences, but also whether NATO could stay relevant in a post-Cold War era where bilateral ties are fast-changing.

Foreign Policy Watch: India-United States

North Atlantic Treaty Organisation’s (NATO) Funding and Summit

Note4Students

From UPSC perspective, the following things are important :

Prelims level : NATO

Mains level : NATO and its fading relevance

What is the news: The U.S. contribution to the North Atlantic Treaty Organisation’s (NATO) operating budget has been cut down at the cost of an increase in Germany’s payments to the alliance. This move comes after repeated criticism of European members of the organisation by the U.S.

  • This will come into effect from 2021, wherein the U.S. and Germany will contribute equally to the NATO budget.
  • In other news, leaders of member states were gathered in London to celebrate the 70th anniversary of the North Atlantic Treaty Organisation (NATO).

Key Points

  • Under the new agreement, the U.S. will cut its contribution to 16.35% of the total NATO’s budget while Germany and other allies’ contributions will go up.
    • The U.S. currently pays 22.1% of the NATO budget and Germany pays 14.8%, under a formula based on each country’s gross national income.
  • France has refused to accept the new arrangement and will keep its contribution the same at 10.5%.
  • All allies have agreed on a new cost-sharing formula under which cost shares attributed to most European allies and Canada will go up, while the US share will come down.

Background

  • Earlier at the 2014 summit, NATO allies had agreed to spend 2% of their GDP on defence.
  • However, the US suggested that countries not only meet their commitment of 2% expenditure on defence but also increase it to 4% immediately.
  • Till 2019, only eight of 29 members are able to spend 2% of their GDP on defence. Germany has also failed to meet this target.

NATO summit: The founding and purpose of the alliance

  • NATO was founded to ensure collective protection for its members — the United States, Canada, and American allies in Europe — against the threat of possible post-War communist expansion and aggression by the Soviet Union.
  • The Soviet Union also formed its own defence and political alliance with Eastern European nations as a counterbalance to NATO — the Warsaw Pact that was signed in 1955.
  • This alliance was disbanded after the dissolution of the Union of Soviet Socialist Republics (USSR) in 1991.

North Atlantic Treaty Organization

  • It is a military alliance established by the North Atlantic Treaty (also called the Washington Treaty) of April 4, 1949, by the United States, Canada, and several Western European nations to provide collective security against the Soviet Union.
  • It is headquartered at Brussels, Belgium.
  • A key provision of the treaty, the so-called Article 5, states that if one member of the alliance is attacked in Europe or North America, it is to be considered an attack on all members. That effectively put Western Europe under the “nuclear umbrella” of the US.
    • NATO has only once invoked Article 5, on September 12, 2001, following the 9/11 attacks on the World Trade Center in the US.
  • NATO’s protection does not extend to members’ civil wars or internal coups.
  • As of 2019, there are 29 member states, with Montenegro becoming the latest member to join the alliance in 2017.
    • France withdrew from the integrated military command of NATO in 1966 but remained a member of the organization. However, it resumed its position in NATO’s military command in 2009.

Relevance of NATO

  • With the collapse of the USSR, NATO lost its essential raisons d’etre, and for most NATO members, the primary concern now is the expansionist ambition of China.
  • NATO has traditionally focused on Russia and the European neighbourhood and recognizes the need to deter “revisionist” and “militarily advanced” Russia, and the threat posed by rogue nations such as North Korea.

Deviance of members

  • Turkey has rejected NATO’s military plan for the Baltic nations against Russia, unless it receives support to defeat Syrian Kurds at its borders, something that France and the US do not agree with.
  • The tensions have come in the backdrop of “Operation Peace Spring” conducted by the Turkish military along the Syrian border in October.
  • During NATO’s Brussels Summit last year, Trump criticised European nations, especially Germany for not spending enough on defence.
  • As per an agreement that was reached in 2014, member nations are supposed to spend up to 2% their GDP on defence on a voluntary basis.
  • Until 2018, the US spends the highest percentage of its GDP (at least 3.5%) on defence, while the Europeans, including the French, the Germans, the Italians, and the Spaniards, spend less than 2%.

Challenges before NATO

  • The great challenge before NATO is its seeming inability to align the diverging priorities of its member nations.
  • France’s priority at the moment is the eradication of terrorism from northeast Syria, while the US under Trump clearly wants to get out of the Middle East and focus more on the military rise of China.
  • The challenge is made stronger by the personalities of the leaders — the Europeans are clearly impatient with Erdogan, and Trump’s unpredictability and repeated attacks on European countries and leaders has not endeared him to them.

Foreign Policy Watch: India-United States

Exercise Tiger Triumph

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Ex. Tiger Triumph

Mains level : India-US defence cooperation


  • The first-ever tri-services India-U.S.A. amphibious exercise titled ‘Tiger Triumph’ is scheduled to be conducted in this week.

Ex. Tiger Triumph

  • The exercise will be conducted off Visakhapatnam and Kakinada coasts.
  • This exercise will include events and field training that simulate moving humanitarian assistance and disaster relief force from ship to shore.
  • It is aimed at building the capacity of both the Indian and U.S. participants and improving their ability to operate together.
  • Around 1,200 Indian soldiers, sailors, and airmen, and 500 U.S. Marines, sailors and airmen will participate in the nine-day exercise which envisages the U.S. and Indian forces establishing professional relationships.
  • The exercise focuses on counter-terrorism operations.

Foreign Policy Watch: India-United States

US-India Defence Technology and Trade Initiative

Note4Students

From UPSC perspective, the following things are important :

Prelims level : DTTI, STA-1

Mains level : India-US defence cooperation

  • The ninth India-US Defence Technologies and Trade Initiative (DTTI) group meeting is scheduled to happen in New Delhi next week.

DTTI

  • DTTI came about to expedite the scope of cooperation on defence technology that become narrow due to the presence of differing bureaucratic processes and legal requirements.
  • Essentially, DTTI is an initiative to provide increased US senior level oversight and engagement to get beyond these obstacles.
  • It is led by Undersecretary of Defence for Acquisition and Sustainment from the United States and Secretary for Defence Protection.

What are its aims?

  • While DTTI is not a treaty or law, it is a flexible mechanism to make sure that senior leaders from both countries are engaged consistently to strengthen the opportunities in the field of defence.
  • Its central aims include strengthening India’s defence industrial base, exploring new areas of technological development and expanding U.S.-India business ties.
  • India’s defence industry was in a growing stage and that India was looking to acquire niche technology in manufacturing defence weapons and equipment.

Back2Basics

STA-1

  • In August 2018, the US granted to India the designation of Strategic Trade Authority Tier 1 or STA-1.
  • This is providing India with greater supply-chain efficiency by allowing US companies to export a greater range of dual-use and high-technology items to India under streamlined processes.
  • This authorisation is the equivalent of NATO allying with Japan, South Korea and Australia.

Foreign Policy Watch: India-United States

[op-ed snap] Raja Mandala: India and the US need to address the vexed issues in trade

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing much

Mains level : India and USA - way ahead

Context

The event at Houston brought together Indian diaspora. This must yield tangible outcomes.

Trade 

  • India and the US are wrapping up the negotiations on trade that have been underway for some time. 

Past relation – sensitive to others’ needs

  • Then External Affairs Minister Jaswant Singh offered quick unilateral support in May 2001 when US President George W Bush’s announced an initiative to build missile defences and move away from the doctrine of deterrence through nuclear terror. 
  • Atal Bihari Vajpayee’s strong support for Bush’s war on terror immediately after 9/11 set the stage for a political and strategic approach to the Indo-US relationship.
  • Bush extended unprecedented support for India’s rise by changing the US domestic nonproliferation laws as well as international regulations to lift a long-standing nuclear blockade against India. 
  • The resolution of the nuclear issue created the basis for a productive partnership with the US.
  • This saw liberalisation of US technology transfers, launch of counter-terror cooperation, the expansion of defence relationship and political cooperation on regional and global issues. 
  • Modi reoriented India’s policy to make Delhi part of the solution in the stalled international negotiations on mitigating global warming. Obama helped finalise the nuclear agreement and integrate India into the global nonproliferation regimes.

Trade issues

  • India’s prickly attitude towards trade liberalisation put it at odds with its major trading partners. 
  • Market access has been an issue that has troubled the relationship in recent years. 
  • A trade deal with the US will make it a lot easier to deal with his administration on a range of issues including terrorism, Kashmir and the unfolding crisis in Afghanistan. 

Way ahead

  • The two countries need to change the direction in bilateral commercial engagement.
  • They need to communicate their interests to each other and signal the political will to overcome domestic obstacles.
  • A new trade agreement must prepare India for profound changes in the global economic order and technological disruption. 

Way ahead

Getting India’s most important trade relationship right in the near term and charting a course for a mutually beneficial commercial partnership with the US over the long term are urgent and worthy goals in themselves.

Foreign Policy Watch: India-United States

[op-ed snap] A minor win for India at WTO

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Domestic Content Requirement

Mains level : Solar dispute at WTO

CONTEXT

A WTO panel in June accepted India’s claim in a dispute concerning U.S. regulations on the domestic content requirement in the production of renewable energy. 

The dispute and the verdict:

  • The dispute revolved around certain States in the U.S. that give incentives to local producers in the form of tax rebates, refunds, and credits when they produce renewable energy using locally manufactured products. 
  • Article III of the WTO’s General Agreement on Tariffs and Trade (GATT) requires that countries do not provide less favorable treatment to ‘like products’ originating from other nations. 
  • A solar PVC manufactured in the U.S. should be liable to the same amount of tax as one made anywhere else in the world.
  • WTO’s determine whether an item is a ‘like product’ based on a product’s end-use, composition, substitutability, consumer preferences, and tariff classifications.
  • In this case, the U.S. conceded that the import from India was a ‘like product’.
  • But the U.S. argued that the figures quoted by India showing growth in the number of solar photovoltaic (PV) systems installed in Washington State between 2005 and 2015 do not support the argument that additional incentives have induced wide-scale adoption of locally made renewable energy products.
  • WTO panel rejected this argument, stating that Washington State’s additional incentive accords an advantage on the use of local products not available for ‘like imported products’. 
  • India was not required to prove that the rise in the production of PV systems was caused by a rise in the production of upstream local products at the cost of ‘like-imported products’.

Significance

  • India had earlier lost a similar dispute over its own domestic content requirements. 
  • The U.S. imported 44% of the Indian solar module exports in the 2018-2019 period.
  • This dispute could have been easily avoided had the two countries settled their differences beforehand. 

Conclusion

There are various other disputes pending between the countries at the WTO involving the export promotion scheme brought in by India and the imposition of excess customs duty on steel and aluminum by the U.S. 

 


Back2Basics

Solar Panel Dispute at WTO

Foreign Policy Watch: India-United States

 ‘Public Charge’ in US immigration policy

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Public Charge

Mains level : US Visa policy and impacts on Indian diaspora

  • Last week, the US signalled a major change in its green card policy, by announcing an expansion in the meaning of the term “public charge”.
  • The new rule could drastically reduce legal immigration to the US.

The ‘Public Charge’

The present definition, according to the website of the US Citizenship and Immigration Services (USCIS), is as follows:

  1. For purposes of determining inadmissibility, “public charge” means an individual who is likely to become primarily dependent on the government for subsistence, as demonstrated by either the receipt of public cash assistance for income maintenance or institutionalization for long-term care at government expense.
  2. The programs falling under the above definition include Supplemental Security Income (SSI), Temporary Assistance for Needy Families (TANF) cash assistance, state and local General Assistance programs and long-term care programs like Medicaid among others.
  3. Programs generally not considered under “public charge” include “non-cash benefits” such as public schools, childcare services, Medicaid (non long-term), public assistance for vaccinations, emergency medical services, Children’s Health Insurance Program (CHIP), nutrition programs like Food Stamps, foster care and adoption assistance and job training programs.

Consequences of an immigrant becoming a ‘public charge’

  • Under the existing policy, USCIS immigration officers can deny a green card on “public charge” grounds if the applicant is “likely to become primarily dependent on the government for subsistence”.
  • This discretionary power has to be exercised only after looking into “the totality of the circumstances”, including factors such as age, health, financial status, education, and skills.
  • Inadmissibility on “public charge” grounds can only take place in green card proceedings, and not in those for citizenship (which in most cases is sought when the applicant already has a green card).

What has the Trump administration changed?

  • The new rule expands the ambit of the term “public charge”, by introducing additional conditions that could preclude an immigrant from obtaining a green card.
  • Major changes include: more welfare programs being included in the “public charge” list, the taking into consideration of even past use of benefits, and a significant increase in the family and individual income criteria.

Impact of the move

  • The rule is also criticised for its possible long term impact on the US, as legal immigrants already residing in the country would now be fearful of availing essential services.
  • Critics have alleged a racial bias, saying that the move targets immigrants from developing countries, while prioritizing more affluent applicants from the global North.

Foreign Policy Watch: India-United States

U.S. formally withdraws from INF arms treaty

Note4Students

From UPSC perspective, the following things are important :

Prelims level : INF Treaty

Mains level : Impact of US withdrawl from INF Treaty

  • The U.S. and Russia ripped up a Cold War-era missile pact in a move that raised the spectre of an arms race between the global superpowers.

INF Treaty

  • The 1987 Intermediate-Range Nuclear Forces (INF) treaty limited the use of medium-range missiles, both conventional and nuclear.
  • Under the INF treaty, the US and formerly Soviet Union agreed not to develop, produce, possess or deploy any ground-based ballistic and cruise missiles that have a range between 500 and 5,500 km.
  • It exempted the air-launched and sea-based missile systems in the same range.
  • The INF treaty helped address the fears of an imminent nuclear war in Europe.
  • It also built some trust between Washington and Moscow and contributed to the end of the Cold War.

Loopholes in the treaty

  • It left the other nuclear weapon powers free to develop ground-based intermediate-range forces
  • In the age of nuclear superpowers, it did not seem to matter.
  • Since then, many countries have developed missiles in the range of 500 to 5,500 km, including India, Pakistan and North Korea.
  • Nearly 90 per cent of China’s vast missile armoury — estimated at around 2,000 rockets — is in the intermediate range and would be illegal if Beijing were to be a part of the INF treaty.

Row over a missile

  • Washington has for years accused Russia of developing a new type of missile, the 9M729, which it says violates the treaty — claims that NATO has backed up.
  • The missile has a range of about 1,500 kilometres according to NATO, though Moscow says it can only travel 480 kilometres.
  • Russia had failed to return to full and verified compliance through the destruction of its noncompliant missile system.

Foreign Policy Watch: India-United States

[op-ed snap] Kashmir mediation

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing Much

Mains level : USA's stand on Kashmir Issue

CONTEXT

Facing a furore in Parliament over the issue, the government has clarified in no uncertain terms that Prime Minister Narendra Modi did not request U.S. President Donald Trump to “mediate or arbitrate” on the Kashmir issue, as Mr. Trump claimed on Monday.

Response by government

  • Addressing Parliament, External Affairs Minister S. Jaishankar said India remains committed to its policy of discussing all outstanding issues with Pakistan only bilaterally, and assured the House that Mr. Modi did not raise this with Mr. Trump at their recent meeting in Osaka during the G-20 summit.
  • In making the claim that has been roundly denied by New Delhi, Mr. Trump breached several well-laid diplomatic protocols, including one against discussing privileged conversations with a leader, during a public conversation with another.

Statements

Mr. Trump also said a “lot” of his talks with the Pakistan Prime Minister would focus on India and Afghanistan, an odd departure from the precept of putting bilateral issues to the fore, and being more discreet when discussing sensitive relations involving other countries.

New Realities

  • For New Delhi, it may be time to recognise that Mr. Trump’s comments are a sign of new realities in international diplomacy, where leaders care less about niceties and more about open communication.
  • Mr. Modi will have to prepare accordingly for some plain-speaking when he visits the U.S. and meets with Mr. Trump, as he is expected to, in September this year.
  • In the short term, the government’s decision to address the claim by Mr. Trump will have nipped any repercussions in the bud.

Way Forward

The government should pursue the issue through diplomatic channels with the U.S. government, and determine whether Mr. Trump made the comments out of confusion or deliberately.

Stand on Kashmir

Opposition to third part mediation – India has always opposed any suggestion of third-party mediation on Jammu and Kashmir; both the 1972 Shimla Agreement and the 1999 Lahore declaration included India’s and Pakistan’s commitment to resolving issues between them.

It is unlikely that Mr. Modi would have spoken out of line with this policy, and the most charitable explanation for Mr. Trump’s new contention is that he mistook India’s appeal to the international community to hold Pakistan accountable for terror groups on its soil that carry out attacks in Kashmir, for a general desire for mediation.

Contentious Issues

  • Mr. Trump’s comment in March that the U.S. successfully mediated for the release of captured fighter pilot Abhinandan by Pakistan may have even given him some hope that the U.S. could play a larger role on the Kashmir issue, and New Delhi would need to address that.
  • A more worrying proposition is that Mr. Trump took the line favoured by his Pakistani interlocutors on Kashmir as a way of enhancing his own plans for a pullout from Afghanistan with Pakistan’s help on security and talks with the Taliban.

Conclusion

While the damage from Mr. Trump’s words may not have a very lasting impact on India-U.S. ties, that from any rushed measures to force a resolution in Afghanistan will have far-reaching and lasting impact, including on India.

Foreign Policy Watch: India-United States

HR 1044

Note4Students

From UPSC perspective, the following things are important :

Prelims level : HR 1044

Mains level : Changing visa norms by US and its implication on Indians

HR 1044

  • The US lawmakers passed a Bill titled Fairness for High-Skilled Immigrants Act (HR 1044).
  • It is aimed at lifting the current seven per cent country-cap on issuing Green Cards, a development which would benefit thousands of highly-skilled Indian IT professionals.

What the HR 1044 means for India?

  • A change in the existing law can mean that immigrants from countries like India and China seeking permanent residency could expect shorter wait times.
  • Indian IT professionals, who under the existing law would have to wait up to 70 years as some studies suggest, can now hope for a fairer system with lesser processing time.
  • Apart from removing caps for employment-based Green Cards, caps for family-based categories have also been increased to 15%.
  • A US based institute released a study in 2018 saying, that based on current law and backlog, Indian nationals holding advanced educational degrees may have to wait over 150 years in order to get a Green Card.

Back2Basics

What is a Green card?

  • A Permanent Resident Card, also known as a ‘Green Card’, allows a non-US citizen to live and work permanently in America.
  • Green Card holders can qualify for US citizenship generally after three to five years.
  • Over 10 lakh migrants from around the world are known to receive Green Cards yearly.

Popular Green Card categories

  • Categories of employment-based visas under which Indian professionals are known to apply are the:
  1. ‘EB-1’, or priority workers with extraordinary ability
  2. ‘EB-2’ or those holding advanced degrees, and
  3. ‘EB-3’ or skilled workers.
  • The EB-2 category generally sees the most number of applicants.

Foreign Policy Watch: India-United States

[op-ed of the day] Game of chicken that can end in disaster

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing Much

Mains level : Impact of USA Iran conflict on the regional politics

Note- Op-ed of the day is the most important editorial of the day. Aspirants should try to cover at least this editorial on a daily basis to have command over most important issues in news. It will help in enhancing and enriching the content in mains answers. Please do not miss at any cost.

CONTEXT

On July 7, Iran announced that it would begin enriching uranium above a concentration of 3.67% permitted under the nuclear deal, known as the Joint Comprehensive Plan of Action (JCPOA), reached by Iran and the P5+1 (China, France, Germany, Russia, the United Kingdom, and the United States) on July 14, 2015.

Increasing tensions between USA and Iran

  • These steps come in the wake of increasing tensions between the U.S. and Iran following the shooting down of an unmanned U.S. drone over the Strait of Hormuz in June.
  • However, it led to the U.S. President, Donald Trump, first ordering a retaliatory strike on Iran and then rescinding it at the last minute.

Effects on regional peace

  • The mayhem could have spread to the entire West Asian region with Iran attacking strategic American, Saudi and Emirati targets around the Gulf and attempting to block the Strait of Hormuz in an effort to choke off the supply of Gulf oil to the international market.
  • Further, Iranian allies in Lebanon, Iraq and Syria might have launched attacks against American troop concentrations as well as against U.S. ally Israel, thus inviting further American and Israeli counter-retaliation and dragging the U.S. into its third major war in the region.

US’s withdrawal from the deal and sanctions

  • The downward spiral in U.S.-Iran relations started with Mr. Trump’s decision (announced in May 2018) to withdraw from the JCPOA against the advice of the U.S.’s European allies France, Germany, and the U.K. that are parties to the deal.
  • The Trump administration followed it up with the re-imposition of stringent economic sanctions against Iran that were being gradually dismantled following the 2015 nuclear deal.
  • These included sanctions against foreign companies doing business with Iran and against countries buying Iranian oil.

List of demands

 No waivers – Finally, the U.S. announced in April this year that it would not extend waivers granted earlier to eight countries (China, India, Japan, South Korea, Taiwan, Turkey, Italy and Greece) which had been the largest importers of Iranian oil.

Iran’s nuclear programme – Further curbs on Iran’s nuclear programme including total stoppage of uranium enrichment even at low levels permitted by the JCPOA and monitored by the International Atomic Energy Agency.

Support to terrorist groups – Further, USA demanded that Iran stop all support to Hezbollah and Hamas which the U.S. considers to be “terrorist” groups, permit the disarming of Shia militias in Iraq, and stop aiding Houthis in Yemen fighting Saudi and Emirati forces in that country.

End building of ballistic missiles  – Above all, Mr. Pompeo demanded that Iran end building of ballistic missiles and halt further launching or development of nuclear-capable missile systems.

Rejection by Iran

However, persisting and escalating moves by the U.S. during the past year now seem to have made it impossible for Tehran to simultaneously maintain the contradictory position of resisting American demands while continuing to comply with restrictions imposed on its nuclear programme by the JCPOA.

Retaliatory measures

  • The Iranian government, in order to maintain its standing with the populace, has been left with no option but to undertake tit-for-tat measures, further heightening the political temperature in the Persian Gulf.
  • This has turned the U.S.-Iran standoff into a game of chicken in which either one of the parties to the game blinks and concedes victory to the other or a “crash” becomes inevitable.

Conclusion

  • The American-Iranian confrontation seems to be inexorably heading towards the latter outcome.
  • If taken to its logical conclusion this scenario can turn out to be catastrophic for the entire West Asian region as well as for the international economy.
  • Oil supplies from the Persian Gulf are likely to be greatly reduced if not totally eliminated sending oil prices sky-rocketing, especially threatening the vulnerable economies of the global South.

Foreign Policy Watch: India-United States

US law to give India NATO ally-like status

Note4Students

From UPSC perspective, the following things are important :

Prelims level : NATO

Mains level : India-US strategic relationship

  • The U.S. Senate has passed a legislative provision that brings India at par with America’s NATO allies and countries like Israel and South Korea for increasing defence cooperation.

How will it benefit India?

  • The act provides for increased U.S.-India defence cooperation in the Indian Ocean in the areas of humanitarian assistance, counterterrorism, counter-piracy and maritime security.
  • It will clear the way to provide state-of-the-art weapons and sensitive technology to India.
  • It will make India a big associate of US in defence deals also it will increase India’s status.
  • Earlier, the US-India had signed Communication, Compatibility and Security Agreement (COMCASA) in 2018 for sharing sensitive information.

About NATO

  • The North Atlantic Treaty Organization, also called the North Atlantic Alliance, is an intergovernmental military alliance between 29 North American and European countries.
  • It is based on the North Atlantic Treaty that was signed on 4 April 1949.
  • NATO constitutes a system of collective defence whereby its independent member states agree to mutual defence in response to an attack by any external party.

Assist this newscard with:

India to be treated as NATO ally

Foreign Policy Watch: India-United States

[op-ed snap] Terms of estrangement

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing Much

Mains level : Contentions in India and USA relationship

CONTEXT

While India and the US claim to be strategic partners, the bones of contention are now more numerous and more substantial than they’ve been in the last two decades — after Bill Clinton’s visit in 2000.

1.Freedom of religion issue

  • For more than half a decade, the annual report of the State Department on Freedom of Religion accuses India of not treating its minorities in the right manner.
  • In April, the 2019 report not only mentioned the role of vigilante groups involved in “mob lynchings” but cited organisations: “A multifaceted campaign by Hindu nationalist groups like Rashtriya Swayamsevak Sangh (RSS), Sangh Parivar, and Vishva Hindu Parishad (VHP) to alienate non-Hindus or lower-caste Hindus is a significant contributor to the rise of religious violence and persecution.

2. Trade Issues

E-commerce –

  • In February, India introduced new e-commerce rules that affected foreign online retailers, including Amazon and Walmart, which could no longer negotiate exclusives on products and sell items via vendors they hold an equity stake in, like Flipkart (that Walmart bought for $16 bn last year).
  • Amazon India and Flipkart represent 70 per cent of e-commerce in India today and these new rules were intended to help domestic sellers to resist the American giants.

Generalised System of Preferences –

  • Trump waited for the Indian elections to be over, but on May 31 he terminated India’s designation as a beneficiary developing country of the Generalised System of Preferences.
  • The withdrawal of duty-free access to Indian exporters is bound to damage the Indian economy.
  • The Modi government retaliated in June by imposing tariffs on 29 American goods.

3.Visa Issues

  • Indians are not as welcome in the US as they used to be. Not only have thousands of techies seen their demand for an H1B visa extension rejected, but the Trump administration is contemplating imposition of a 10-15 per cent quota of all the H1B visas on migrants from countries forcing foreign companies to store data locally.
  • India is one of them and is, therefore, criticised by companies like Mastercard and Visa, which have effectively lobbied the Trump administration.
  • Such a cap on the Indian H1B visas would be an additional blow as Indians get about 70 per cent of the 85,000 H1B visas granted every year by the US.
  • One may argue that such practices are unfair, but India’s attempts at regulating migration in the North-east reflect the same agenda — the kind of agenda on which national-populists are elected.

4.Strategic autonomy issue –

  • The Indian policy of multi-alignment or strategic autonomy is another.
  • This approach is hardly sustainable when the world scene gets so polarised that memories of the Cold War come to mind.
  • India thought it could be a strategic partner of the US and still buy S-400from Russia.
  • It went ahead with the deal at a cost of Rs 40,000 crore (without any tender) in spite of US warnings — and now it has to negotiate in order to get a sanctions waiver.

5.Balancing Iran and USA

  • Similarly, to be a friend of Iran and the US at the same time is getting more and more difficult.
  • New Delhi has had to bow to Washington when the Trump administration ended on May 2 waivers that allowed India (among others, including China) to continue their oil imports for six months after American sanctions over Iran were re-imposed.
  • After all, India needs Iran because of Chabahar and Afghanistan — where the American withdrawal is another bone of contention.
  • An important question is arising in DC too: How far can the US rely on India to contain China?
  • In the last Shanghai Cooperation Organisation meeting at Bishkek, Modi did not rule out India joining hands with Russia and China in the emerging trade war with the US.
  • The decision India will make regarding 5G will send a significant signal: Will it boycott Huawei, like the US, or will it say “no” to the US and deal with Huawei?

Conclusion

At Osaka, Modi thanked Trump for his “love towards India” and the latter said that both countries “have never been closer”. But these words may not reflect the full picture of the US-India relationship at a time of resurgent nationalism and national-populism.

Foreign Policy Watch: India-United States

India out of GSP programme

Note4Students

From UPSC perspective, the following things are important :

Prelims level : GSP

Mains level : Implications of GSP status removal on India

  • The US has announced its intention to “terminate” India’s designation as a beneficiary of its Generalized System of Preferences (GSP) duty concession programme.

Why such move?

  • Under the programme, certain products can enter the US duty-free if beneficiary developing countries meet the eligibility criteria established by its Congress.
  • US said that India had failed to provide assurances to the US for “equitable and reasonable” access to its markets in numerous sectors.
  • US’s refers to India as a “very-high tariff nation” and demands for a “reciprocal tax” on goods from India.

What is GSP?

  • The GSP is a US trade preference programme designed to promote economic development by allowing duty-free entry for thousands of products from designated beneficiary countries.
  • The concept of GSP is very different from the concept of MFN as it provides equal treatment in the case of tariff being imposed by a nation.
  • But in case of GSP, differential tariff could be imposed by a nation on various country whether it is a developed country or a developing country.
  • Both the rules comes under the purview of WTO.
  • GSP provides tariff reduction for least developed countries but MFN is only for not discriminating among WTO members.

India and GSP

  • India has been the biggest beneficiary of the GSP regime and accounted for over a quarter of the goods that got duty-free access into the US in 2017.
  • Exports to the US from India under GSP — at $5.58 billion — were over 12 per cent of India’s total goods exports of $45.2 billion to the US that year.
  • The US goods trade deficit with India was $22.9 billion in 2017.
  • With India exporting $6.3 billion worth of goods to the US under GSP in 2018 and availing duty concession to the tune of only $240 million last year.

Impact of GSP withdrawal

  • Even after US withdrawal of GSP, India continues to enjoy tariff preference from many countries including Australia, Russia and Japan, as well as the European Union (EU), among others.
  • Indian exports to these countries was nearly five times the total exports to the US in 2018.
  • Within the group of countries that provided GSP benefit to India, exports to EU nations were highest, followed by the US, Japan, Russia and Australia, respectively.
  • As exports under GSP accounted for over 11 per cent of India’s total goods exports of $54.4 billion to the US last calendar year, the withdrawal could affect India’s competitiveness in exports.
  • Indian exports from US included organic chemicals, raw materials, iron, steel, furniture, aluminium and electrical machinery.

Foreign Policy Watch: India-United States

[op-ed snap] St. Petersburg consensus: On Russia-China bonhomie

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing Much

Mains level : increasing cooperation between Russia and China

CONTEXT

Russia and China are strengthening ties amid tensions with the U.S.

Background

  • The bonhomie between China’s and Russia’s leaders at the St. Petersburg International Economic Forum last week was demonstrable.
  • In a sign of the heightened tensions between the U.S. and the two countries, Russia’s annual investment gathering was boycotted by the U.S. Ambassador to Russia, Jon Huntsman.
  • His absence was ascribed to the prevailing environment in Russia for foreign entrepreneurs, typified by the detention of U.S. private equity investor Michael Calvey on allegations of fraud.

Cooperation between China and Russia

  • Conversely, the Chinese telecommunications equipment manufacturer Huawei signed an agreement with Russia’s principal mobile operator to start 5G networks, in a rebuff to Washington’s attempts to isolate the firm internationally.
  • Russian President Vladimir Putin and his Chinese counterpart Xi Jinping made it clear in St. Petersburg that the tensions with the West had only drawn them closer.

Reasons for rift with USA

  • Annexation of Crimea – The rift with Russia began with Moscow’s annexation of Crimea in 2014 and the stand-off in eastern Ukraine that continues.
  • Opposition to the 1,200-km-long Nord Stream 2 gas pipeline –  Russia’s tensions with the U.S. and some EU countries stem also from their opposition to the 1,200-km-long Nord Stream 2 gas pipeline from Russia to Germany.
  • U.S. objections draw in part from its eagerness to export liquefied natural gas to Europe, besides thwarting Moscow’s ambition to dominate the region’s energy market.
  • Russian meddling in the 2016 U.S. presidential election – Far more sensitive has been U.S. Special Counsel Robert Mueller’s inquiry into possible Russian meddling in the 2016 U.S. presidential election.
  • Blacklisting of Huawei – Washington’s blacklisting of Huawei, prohibiting it from selling technology to the U.S. and barring domestic firms from supplying semiconductors to Beijing, falls into a class of its own among international trade disputes.

Historic high in bilatral relations

  • Amid these tensions, in St. Petersburg Mr. Xi and Mr. Putin emphasised that bilateral relations were at a historic high, marked by increased diplomatic and strategic cooperation.
  • China participated in Russian military exercises on its eastern border last September, marking a watershed. Moscow and Beijing, hostile rivals of the Cold War era, have for a while been adopting common positions at the UN Security Council on critical international issues.
  • Bilateral relations are also guided by pragmatism.
  • Central Asia – Russia appears realistic about the growing Chinese economic clout in Central Asia, once firmly in its sphere of influence, thanks to China’s massive infrastructure investments under the Belt and Road Initiative.
  • Northern Sea Route – Chinese cooperation would moreover prove critical for Russia’s elaborate plans to exploit the Northern Sea Route along the Arctic as an alternative transportation hub.

Conclusion

International sanctions have not been very effective in isolating Russia. European states, notably Germany, recognise the importance of engaging with Russia to contain Mr. Putin’s expansionist aims. Equally, President Donald Trump’s “America first” policy is compelling potential rivals to make common cause.

Foreign Policy Watch: India-United States

New START Policy

Note4Students

From UPSC perspective, the following things are important :

Prelims level : New START pact

Mains level : Read the attached story

  • Russian has warned to US to withdraw the Obama-era nuclear weapons pact New START due to the US disinterest in its renewal.

New START pact

  • The New Strategic Arms Reduction Treaty (New START) pact limits the number of deployed nuclear warheads, missiles and bombers and is due to expire in 2021 unless renewed.
  • The treaty limits the US and Russia to a maximum of 1,550 deployed nuclear warheads and 700 deployed missiles and bombers, well below Cold War caps.
  • It was signed in 2010 by former US President Barack Obama and then-Russian President Dmitry Medvedev.
  • It is one of the key controls on superpower deployment of nuclear weapons.
  • If it falls, it will be the second nuclear weapons treaty to collapse under the leadership of US President Donald Trump.
  • In February, US withdrew from the 1987 Intermediate-Range Nuclear Forces Treaty (INF), accusing Moscow of violating the agreement.

Foreign Policy Watch: India-United States

US asks for social media details of most visa applicants

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not Much

Mains level : Changing visa norms by US and its implication on Indians

  • The US government on updated visa application forms to require nearly all applicants to provide their social media usernames, email addresses, and phone numbers for the past five years.
  • The requirement to provide the additional information is in line with the Trump administration’s decision to ensure more stringent screening of potential immigrants and visitors to the US.

Stringent screening of visa applicants

  • More than a million non-immigrant and immigrant US visas are given to Indians every year.
  • In 2018, 28,073 Indians were issued American immigrant visas, the vast majority of which passed through the “family preference” process.
  • Since 2009, the biggest jump in the number of Indian immigrants to the US — almost 20% — was seen during 2014-2015.
  • But after reaching a peak of 31,360 in 2016, the numbers of immigrant visas issued to Indians dropped in 2017.
  • In 2018, the US issued 10,06,802 nonimmigrant visas to Indians, the third largest national group behind the Chinese and Mexicans, and amounting to a little over 11% of total nonimmigrant visa issuances.

How the new policy will work?

  • The change affects the nonimmigrant visa online application form (DS-160), the paper back-up nonimmigrant visa application (DS-156), and the online immigrant visa application form (DS-260).
  • Applicants will be expected to choose from 20 online platforms, including Facebook, Flickr, Google+, Instagram, LinkedIn, Myspace, Pinterest, Reddit, Tumblr, Twitter, Vine and YouTube, and provide their usernames on the platforms.
  • Among the social media platforms based outside the United States on the list are Tencent Weibo, Twoo, and Youku.

Why the change

  • Trump administration is trying to improve screening processes to protect US citizens, while supporting legitimate travel to the United States.
  • The statement clarified that consular officers will not request user passwords and that the information will be used to determine if the applicant is eligible for a visa under existing US law.
  • Collecting this additional information from visa applicants will strengthen the process for vetting applicants and confirming their identity.

Concerns over the move

  • Social media is an intricate map of its users’ contacts, associations, habits and preferences.
  • Full information on accounts will give the US government access to a visa applicant’s pictures, locations, birthdays, anniversaries, friendships, relationships and a whole trove of personal data.
  • The sweeping surveillance potential of the new regulations could discourage a wide range of visa applicants.
  • Research shows that this kind of monitoring has chilling effects, meaning that people are less likely to speak freely and connect with each other in online communities that are now essential to modern life.

Foreign Policy Watch: India-United States

US has removed India from its currency monitoring watchlist

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Currency Monitoring Watchlist

Mains level : Impact of the move

  • The US administration under Trump has removed India from its currency monitoring watchlist.

Countries in the list

  • India, alongside China, Japan, Germany, Switzerland and South Korea, was placed in the bi-annual currency watch list in October last year.
  • While India and Switzerland have not been mentioned in the latest list, the US has added Ireland, Italy, Malaysia, Singapore and Vietnam to the list, with China continuing to figure in it.
  • While the designation of a country as a currency manipulator does not immediately attract any penalties, it tends to dent the confidence about a country in the global financial markets.

The criterion

  • Countries with a current-account surplus equivalent to 2 per cent of gross-domestic product are eligible for the list, according to modifications made in the new list, down from 3 per cent earlier.
  • Other thresholds include repeated intervention in the currency markets and a trade surplus with the US of at least $20 billion

Why is this significant?

  • Tweaks in currency policy has been used by the Trump administration to browbeat countries that, from Washington’s perspective, have hurt American businesses and consumers.
  • For India, this comes amid the ongoing trade spat between Washington and New Delhi.
  • Trump has repeatedly claimed that India is a “tariff king” and imposes “tremendously high” tariffs on American products.

Foreign Policy Watch: India-United States

[op-ed snap] Loud and clear

Note4Students

From UPSC perspective, the following things are important :

Prelims level : GPS

Mains level : India US trade ties are needed to be normalised by taking prudent and swift measures.

CONTEXT

After a scathing speech by U.S. Commerce Secretary Wilbur Ross in New Delhi this week, it is no longer possible for the government to brush under the carpet its differences with Washington.

Tensed situation

1. The accusation of restrictive barriers – Speaking to Indian and U.S. businesspersons, Mr. Ross lashed out at what he called India’s unfair trade practices and “overly restrictive market access barriers”.

His comments followed a series of measures by the U.S. that have affected India.

2.Harsh measures – These include a refusal to revoke or waive tariff increases made last year on steel and aluminium, an ultimatum that India “zero out” oil imports from Iran by May 2 even without securing comparable alternatives, and the decision to withdraw India’s GSP (Generalised System of Preferences) trade status.

3. Labeling  India as Tariff king – Mr. Ross repeated President Donald Trump’s accusation that India is a “tariff king”, and threatened India with “consequences” if it responded to U.S. tariffs with counter-tariffs, something New Delhi had threatened but not yet implemented in the hope of hammering out a comprehensive trade package.

4.Elusive solution – Despite rounds of talks, however, a package has remained elusive, and it is time for the government to articulate the problem on its hands.

Need for strategic action

Clearly, the strategy of the past year, to ignore the differences in the hope that the problems would be resolved or that the U.S.’s trade war with China would occupy the Trump administration more, has not worked.

1.Working on tariffs –

  • New Delhi and Washington need to make a more determined attempt to sort out issues, starting from scratch if required, with tariffs.
  • While the 50-60% duties on motorcycles and cars and 150% duties on American liquor that India imposes need a second look, the U.S. must see that average tariffs imposed by India (13.8%) are not much higher than those levied by economies such as South Korea and Brazil.

2.E-commerce regulation and medical devices – In addition, the government will need to revisit some of its decisions like data localisation requirements and new e-commerce regulations, which were declared suddenly, while the U.S. must show some flexibility on India’s price caps on coronary stents and other medical devices.

3.Labelling of non-vegetarian dairy products – The U.S. must understand the cultural differences over the labelling of non-vegetarian dairy products.

Conclusion

Building alternative financial Structures – It is unlikely that the Trump administration will temper its “my way or the highway” approach to Iranian oil sales, and New Delhi will have to work closely with other countries to build alternative financial structures to avoid U.S. sanctions.

Push back on unreasonable demands – Where a compromise is not possible, the government should be ready to push back on unreasonable demands.

Foreign Policy Watch: India-United States

[op-ed snap] Taking tensions seriously

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing Much

Mains level : India- Us ties are not progressing much instead of promises.

CONTEXT

The U.S.’s decision to not extend Iran sanctions waivers, including the one provided to India, has notable implications for India-U.S. relations, given the importance of New Delhi’s energy relationship with Tehran.

 Deleterious Development in bilateral ties

1.Economic Sector

  • It comes on the heels of many other deleterious developments for bilateral ties including the U.S.’s decision to withdraw GSP benefits for Indian exports (in retaliation for Indian tariffs that the U.S. deemed to be prohibitively high) and the Trump administration’s discontent deepening over India’s policies on e-commerce, intellectual property rights and data localisation.
  • These India-U.S. trade and economic tensions aren’t new; the non-security dimension of the relationship has long lagged behind the fast-growing defence side.

Reactions by both sides

  • Both sides have played down these differences and offered reassuring data points:
  • India will scale up oil imports from other top producers;
  • the GSP withdrawal will have minimal impact on India’s economy;
  • the two capitals are working actively on high levels,
  • Most recently through the U.S.-India CEO Forum and the India-U.S. Commercial Dialogue, to ease tensions; and above all the strength of the bilateral relationship can easily withstand all these headaches.

Concerns

  1. long-standing disconnects –  A full-fledged strategic partnership, which both countries endorse, will be difficult to achieve amid such multiple and long-standing disconnects on the trade and economic side.

2. One-sided relationship – Indeed, if bilateral ties are largely driven by technology transfers, arms sales, joint exercises, and foundational agreements on defence, this amounts to a deep but one-sided security relationship, and not a robust and multifaceted strategic partnership.

4.Difficulty in transition – Still, so long as the non-security nuisances affect the bilateral relationship, the shift from a strong security relationship to a bonafide strategic partnership will be difficult.

5. The difference from other partners – After all, one rarely hears complaints or concerns about trade and economic matters in the U.S.’s relations with the U.K., Australia, or Israel, some of its other strategic partners.

Way Forward

  • The U.S. and India have long struggled to agree on what a strategic partnership should look like.
  • Still, no matter how it is defined, any strategic partnership must be broad-based, with trust and cooperation present across a wide spectrum of issues and not just limited to close collaborations in the guns-and-bombs category.
  • In this regard, a true strategic partnership remains, at least for now, elusive between India and the U.S.

Foreign Policy Watch: India-United States

[op-ed snap] Workers and refugees are not criminals

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing Much

Mains level : Refugees are not criminals and they should not be treated in that manner.

CONTEXT

The Mexican border was closed for hours on November 25, 2018 at the San Ysidro Port of Entry to the U.S., after a group of migrants, including children and women, in Tijuana reportedly stormed the area.Global political action is required to reinforce the legitimate identity of a worker.

Rise of Xenophobic tendencies

  • Since the 1990s, not just international but even interregional workers have slowly been pushed into the rubric of ‘criminals’.
  • U.S. President Donald Trump is a prime example of this: his victory was largely founded on his ability to depict international workers, particularly those crossing the U.S.-Mexico border, as ‘criminals’.
  • This tendency is present, though in less obvious versions, in almost all developed and developing countries, including the social welfare democracies of Europe.
  • It is also present within nations, as we in India witnessed in the recent ‘Gujarati’ backlash against workers from Uttar Pradesh and Bihar.
  •  Politicians can garner extra votes by implicitly or explicitly equating international/interregional ‘workers’ with ‘criminals’, and states can openly devise blatantly differential treatment for them — as the children ripped away from their parents and the workers tear-gassed at the U.S. border can testify. This marks a significant development in recent years.

Reasons for labelling refugees as criminals

Most immigrants crossing a border are law-abiding and industrious workers, not ‘criminals’ — this remains the case today, as it was in the past.

1.Nature of capitalism – It longer needs workers as much as it did in the past.

2.Financial speculation –

  • Financial speculation has increasingly dwarfed international trade from the 1990s onwards.
  • More than that, much of financial speculation is based on factors other than the productivity of a sector.  A world dominated by financial speculation does not need workers in two ways:
  • Financial speculation does not depend on the production of workers.

3. Post-humanism –

  • It is used to suggest a world after human beings, a world run by artificial intelligence.
  • Inevitably, for those in power — either in terms of a monopoly on wealth or a monopoly on knowledge — a world of financial speculation leads to a ‘post-human’ world run by artificial intelligence.
  • Once workers become redundant and numbers are sufficient, then, inevitably, one can think complacently of replacing human intelligence with artificial intelligence.

Conclusion

  • Universal Solution – Solution has to be ‘universal’ and global. Global political action is needed to ensure international working rights, linked to human status and not the caprice of state or capital.
  • Otherwise, as the right to work can currently be ensured only by national governments, it will always be used to define other — ‘foreign’ — workers as actual or potential criminals.
  • The threat of monopoly of corporations– Soon it might well become the monopoly of corporations. It is basically being used to criminalise those workers who are not allowed — by nation-states or neoliberal capitalism or both — the legitimate identity of a worker.
  • And as this is a shrinking identity — there are fewer and fewer active workers under the impact of rampant financial speculation — it simply adds to the official metamorphosis of more workers into ‘criminals’.

Foreign Policy Watch: India-United States

India to be treated as NATO ally

Note4Students

From UPSC perspective, the following things are important :

Prelims level : HR 2123

Mains level : India-US strategic relationship

  • American lawmakers have reintroduced a key legislation in their House of Representatives which seeks to advance the US-India strategic relationship.

HR 2123 Bill

  • It seeks to send a powerful signal that defence sales to India should be prioritized according to US-India Strategic Partnership Forum, which had worked on this important legislation.
  • The proposed legislation follows the National Defense Authorization Act (NDAA) of 2017 including special language that designated India as a “Major Defence Partner” of the US.
  • Although powerful in its own right, the NDAA FY 2017 has no legal bearing on the State Department’s body of legislation, nor does it compel the State Department to view defence with India more favorably.
  • To fulfil the spirit and intent of the NDAA 2017, the US-India Enhanced Cooperation Act would amend the Arms Export Control Act to put India on par with NATO allies and Israel, South Korea, New Zealand, Australia and Japan.
  • The two taken together illustrates the major changes that have taken place in the India-US relationship over the past two decades.

Impact of the legislation

  • If enacted, the legislation would ensure that the US State Department treats India as a “NATO ally” for the purposes of the Arms Export Control Act.
  • India is the world’s largest democracy, a pillar of stability in the region, and has shown strong commitments to export control policies.
  • This adjustment to US law will further allow the US-India partnership to flourish in line with our security commitment to the Indo-Pacific region.

Foreign Policy Watch: India-United States

India, US set up first ever secure communication link under COMCASA

Note4Students

From UPSC perspective, the following things are important :

Prelims level : COMCASA

Mains level : India-US strategic partnership

  • Under COMCASA pact, the first-ever secure communication link between the Indian Naval Headquarters and the US Naval Commands was recently set up.
  • This will give India access to the latest US naval intelligence.

Impact of COMCASA

  • With COMCASA in place, India will not only be able to obtain critical defence technologies from the US but also gain access to critical communication network of the US armed forces and real-time intelligence.
  • The US has now also activated the Selective Availability Anti-Spoofing Module GPS system in some of the Indian Air Force’s C-130 and C-17 transport aircraft.
  • The two upgrades will allow both sides to share real-time operational intelligence.
  • India has also been assured that the US will not share data from Indian platforms with another country, nor access such data without prior permission.
  • In due course, the agreement will enable both sides to operate on the same communication systems, thus ensure interoperability among the armed forces of both countries.

Communications Compatibility and Security Agreement (COMCASA)

  • The COMCASA which paves the way for transfer of communication security equipment from the US to India was signed after the first 2+2 last year.
  • Navigate to the page for additional readings:

[Burning Issue] India-US COMCASA Agreement

Foreign Policy Watch: India-United States

[op-ed snap] A reality check

Note4students

Mains Paper 2: IR | Effect of policies & politics of developed & developing countries on India’s interests, Indian diaspora

From the UPSC perspective, the following things are important:

Prelims level: UNSC

Mains level: Impact of China’s Block on listing of Masood Azhar and USA’s efforts to counter the chinese move


NEWS

CONTEXT

The U.S. move to take a listing request for Jaish-e-Mohammad founder Masood Azhar directly to the UN Security Council is an indicator of the frustration of a majority of the Council’s permanent members with China’s refusal to budge on the issue.

Reason for banning Azhar

  • JeM was banned in 2001 with a listing at the UNSC that names Azhar as its founder and financier
  • He was accused of working with al-Qaeda chief Osama bin Laden
  • He was seen by the entire world on TV screens as he was exchanged for hostages at Kandahar following the 1999 Indian Airlines hijack,
  • Since 2001, the JeM and Azhar have claimed responsibility for several terror attacks that resulted in the deaths of dozens of innocent persons, including, most recently, the February 14 attack on a CRPF convoy in Pulwama.

China’s Stand on resolution

  • China has used its veto on Azhar’s listing at the 1267 UNSC Sanctions Committee four times in the past decade, evidently to protect Pakistan.
  • Its stand on Azhar is at variance with the otherwise tough stand on terror in Xinjiang province.
  • Also, it has allowed terrorists and groups based in Pakistan to be listed at the UNSC since 2001 and agreed to “grey list” Pakistan at the Financial Action Task Force for terror financing.
  • Just on Thursday, it joined other UNSC members in passing a resolution against terror financing.

Us recent initiatives on issue

  • With the latest proposal, the U.S. plans to “shame” China by bringing the Azhar listing to a public debate at the UNSC.
  • And if that fails, it is reportedly considering a UN General Assembly statement condemning Azhar.
  • The listing of Azhar is an unfinished task India is justified in pursuing.

Concerns with Us’s proposal

  • However, the latest U.S. move comes with some concerns.
  • To begin with, there is no indication that China is ready to change its stand, particularly in the face of coercion or threat from the U.S., and it could veto this proposal as well.
  • There appears to be little to be gained at present by forcing China further into Pakistan’s corner, especially as New Delhi has said it would pursue the Azhar listing with China with “patience and persistence”, in keeping with its desire not to sacrifice the bilateral relationship over the issue.
  • It is equally unlikely that a world power like China would be moved by the threat of public humiliation.

Conclusion

New Delhi must applaud the strong support the U.S. and the other UNSC members have provided on the issue of cross-border terror threats, and on the vexed issue of Azhar’s listing. But it must be careful not to stake too much on an immediate win at the UNSC vis-a-vis China, and keep its expectations realistic.

Foreign Policy Watch: India-United States

Base Erosion and Profit Shifting (BEPS)

Note4Students

Mains Paper 2: IR| Effect of policies and politics of developed and developing countries on India’s interests

From UPSC perspective, the following things are important:

Prelims level: CBC reports, BEPS

Mains level: India-US trade relations


News

Context

  • India and the U.S. signed an inter-government agreement for the automatic exchange of country-by-country (CbC) reports.
  • This will reduce the compliance burden for Indian subsidiary companies of U.S. parent companies.
  • This is a key step in making India compliant with the Base Erosion and Profit Shifting (BEPS) project, of which it is an active participant.

What is BEPS?

  • Base Erosion and Profit Shifting (BEPS) is a tax avoidance strategy used by multinational companies by exploiting gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations.
  • In order to combat this, many countries entered into agreements to share tax information with each other to enhance transparency and make such profit shifting that much harder.
  • Here, profits are shifted from jurisdictions that have high taxes (such as the United States and many Western European countries) to jurisdictions that have low (or no) taxes (so-called tax havens).
  • The BEPS Action Plan adopted by the OECD and G20 countries in 2013 recognised that the way forward to mitigate risk from base erosion and profit shifting was to enhance transparency.

CBC Reports

  • Against this background, a template was released in 2014, which outlined how MNEs could report the required information for each tax jurisdiction in which they do business. These are called the country-by-country reports.
  • MNEs are also required to identify each entity within the group doing business in a particular tax jurisdiction, and to provide information about the business activities each entity conducts.
  • This information is to be made available to the tax authorities in all jurisdictions in which the MNE operates.
  • This was seen as placing a huge compliance burden on the subsidiary companies of these MNEs.

Assist this newscard with:

India, US to sign pact for exchange of country-by-country reports

Foreign Policy Watch: India-United States

[op-ed snap]Parallel tracks on trade ties

Note4Students

Mains Paper 2: International relations| Effect of policies and politics of developed and developing countries on India’s interests, Indian Diaspora.

From UPSC perspective, the following things are important:

Prelims level: Basic knowledge of India-US trade relations.

Mains level: The news-card analyses the India-US trade relation in recent times, in a brief manner and impact of GSP review.


NEWS

CONTEXT

Recently US took decision to rescind the benefits Indian exports enjoy under the Generalised System of Preferences (GSP) programme.

Is India Responsible for this?

  • It begins with the change in foreign direct investment (FDI) rules in India.
  • The tightened norms that came into effect on February 1 place several restrictions on e-commerce companies, including Walmart-owned Flipkart and Amazon.
  • The unexpected changes came after Walmart, the world’s largest retailer, paid over $16 billion to acquire Flipkart last May.
  • Trump notified Congress of his intention to slap punitive action on India by ending preferential treatment for the country’s exports.
  • Walmart’s reputation for killing small retail businesses influenced New Delhi’s decision to tighten the FDI rules.
  • Economic diplomacy can still defuse the situation and prevent the removal of the GSP benefits .

Background of trade tensions between the two countries

  • The simmering tensions go back to April 2018 when the United States Trade Representative (USTR) launched a review of New Delhi’s eligibility for the GSP programme.
  • New Delhi, in response to Washington’s 25% tariff hikes on steel and 10% levies on aluminium, immediately accused it of unfair trade practices, and, seeking to signal a muscular approach.
  • Bilateral talks since then have failed to ease tensions and India now stares at losing the GSP benefits.
  •  U.S. medical and dairy industries complained that New Delhi is not providing them “equitable and reasonable access to its market.
  •  Data localisation policies deepened the rift.

Tensions Due to Price control over drugs and medical devices

  • New Delhi’s use of price control measures against imported drugs and medical devices has grown noticeably.
  • US. manufacturers complain that in doing so, New Delhi has meted out differential treatment to them vis-à-vis domestic players.
  • The U.S. medical device industry wants price controls on cardiac stents and knee implants withdrawn and would like products to be treated on parity with domestic medical devices.
  • New Delhi has preferred to act against unreasonable price mark-ups through price controls when exactly the same  can be achieved through other types of policy alternatives.
  • The USTR is right in pointing out that price capping counts as a trade barrier.
  • New Delhi can easily address the concerns by replacing price controls with trade margin rationalisation measures.

Impact of losing GPS status

  • India is the largest beneficiary of the GSP.
  • The GSP is aimed at promoting economic development by allowing duty-free entry of products from designated beneficiary countries.
  • The immediate loss for India is preferential access at zero or minimal tariffs to the U.S. in case of about 1,900 products, or about half of all Indian products.
  • New Delhi has downplayed the impact of the proposed withdrawal of benefits, saying exports worth $190 million only are likely to be affected and that the tariff advantage was 4% or more on only 2,165 of a total of 18,770 tariff lines.
  • The loss to the economy would be much larger than what the Department of Commerce is projecting.
  • The actual loss will not be limited to the immediate tariff advantage.
  • Indian exporters are competing for market share in the U.S. with other low-income countries in industries where margins are wafer thin.
  • Even minor price hikes can drive significant drops in export volumes.
  • In which case, losing GSP access will be costlier than the projections.
  • Among price-sensitive products eligible for higher GSP benefits that risk losing out to competition from other countries are processed food, leather products, plastic products, building materials, tiles, hand tools, engineering goods, cycles and made-ups such as pillow/cushion sleeves and woven women’s apparel.

 

 

Foreign Policy Watch: India-United States

India, US to sign pact for exchange of country-by-country reports

Note4Students

Mains Paper 2: IR| Effect of policies and politics of developed and developing countries on India’s interests, Indian Diaspora.

From UPSC perspective, the following things are important:

Prelims level: CBC reports

Mains level: India-US trade relations


News

  • India and the US can now exchange country-by-country (CbC) reports filed by the ultimate parent corporations based in either of the countries.
  • This will reduce the compliance burden on their subsidiaries operating out of these countries.

CBC reports

  • The Income Tax Act requires Indian subsidiaries of multinational companies to provide details of key financial statements from other jurisdictions where they operate.
  • This provides the IT department with better operational view of such companies, primarily with regards to revenue and income tax paid.
  • The objective of mandating CbC is to ensure that all relevant tax authorities have access to the same information about an MNC’s value chain and the resulting tax consequences.
  • The provision was a part of the base erosion and profit shifting action plan, and later incorporated in IT Act also.

Why file such reports?

As per the Income-tax Act, a constituent entity of an international group, resident in India, other than a parent entity or an alternate reporting entity of an international group, resident in India, shall furnish the Country-by-Country (CbC) Report for a accounting year within the period as may be prescribed, if the parent entity of the said International Group is resident of a country or territory:

  • where the parent entity is not obligated to file the CbC Report
  • with which India does not have an agreement providing for exchange of the CbC Report OR
  • where there has been a systemic failure of the country or territory and the said failure has been intimated by the prescribed authority to such constituent entity

Why this move?

  • With this, Indian constituent entities of international groups headquartered in USA, who have already filed CbC Reports in the USA, would not be required to do local filing of the CbC Reports of their international groups in India.

Foreign Policy Watch: India-United States

[op-ed snap]Life without GSP

Note4Students

Mains Paper 2: International relations| Effect of policies and politics of developed and developing countries on India’s interests, Indian Diaspora.

From UPSC perspective, the following things are important:

Prelims level: Basic knowledge of India-US trade relations.

Mains level: The news-card analyses the India-US trade relation in recent times, in a brief manner and impact of GSP review.


NEWS

CONTEXT

The U.S. has ultimately acted on its threat to withdraw concessions granted to Indian imports under the Generalised System of Preferences.

Emerging tensions in trade

  • India-U.S. trade tensions escalated last year when the U.S. took two consecutive decisions to increase import tariffs on steel and aluminium, and place India’s eligibility for GSP benefits under review.
  • Shortly after, India said it would impose retaliatory tariffs on imports from the U.S. and even notified the list of items on which these would apply.
  • The GSP review, however, stretched on, with the two countries holding frequent talks to address the concerns. India, for its part, postponed the deadline for the imposition of the retaliatory tariffs six times; the latest deadline is on April 1.

Reasons to review GSP status

  • Washington’s decision to review India’s GSP status stemmed from complaints from American medical and dairy industries, both of which said India was not providing “equitable and reasonable access to its market”.
  • India has said it had tried hard to cater to most of the U.S. demands and reach an understanding, but key points of difference, especially regarding India’s cultural concerns to do with dairy products, could not be accommodated.
  • The U.S. has been expressing discontent over India’s policies to do with data localisation and FDI rules in e-commerce.

India’s Response

  • Commerce Ministry said that the GSP benefits amounted to only $190 million while India’s total exports under GSP to the U.S. stood at $5.6 billion.

Options before the Indian government

  • Talks on the issue would still continue during the 60-day period after which the GSP decision would come into effect.
  • The other option the government can exercise is to impose retaliatory tariffs on U.S. goods.

Conclusion

  • It bears emphasis that while the actual amounts at stake are relatively small, with even India’s proposed tariffs on the U.S. amounting to just $900 million, the impact on small industries in the country could nevertheless be significant.
  • Export bodies have already said that such industries would lose their market share in the U.S. without fiscal support to help them maintain their edge. In its absence, orders meant for India could go to other GSP countries, signs of which are already evident.

Foreign Policy Watch: India-United States

India downplays impact of U.S. GSP withdrawal

Note4students

Mains Paper 2: IR | Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests

From UPSC perspective, the following things are important:

Prelims level: GSP

Mains level: Impact of US withdrawal of GSP status to India


News

  • Recently US President referred to India as a “very-high tariff nation” and demanded for a “reciprocal tax” on goods from India
  • Now it has given a 60-day withdrawal notice to India on the Generalized System of Preferences (GSP) benefits extended by US.

GSP benefits to India

  • GSP benefits are envisaged to be non-reciprocal and non-discriminatory benefits extended by developed countries to developing countries.
  • In India’s case the GSP concessions extended by the US amounted to duty reduction of only USD 190 million per annum.

Addressing US objections

  • The US had initiated the review on medical devices and dairy industries, but subsequently included numerous other issues on a self-initiated basis.
  • These included issues related to market access for various agriculture and animal husbandry products, relaxation / easing of procedures related to issues like telecom testing / conformity assessment and tariff reduction on ICT products.

Unacceptable demands

  • On the issue of dairy market access, India has clarified that the source animal had never been fed animal derived blood meal, is non-negotiable given the cultural and religious sentiment, the requested simplified dairy certification procedure and without diluting this requirement was considered.
  • On reduction of our IT duties, India’s duties are moderate and not import stopping.
  • Any MFN duty reduction would almost entirely benefit third countries.
  • Accordingly, India extended willingness to extend duty concessions on specific items in which there is a clear US interest.

US trade deficit has also lowered

  • Due to various initiatives resulting in enhanced purchase of US goods like oil and natural gas and coal the US trade deficit with India has substantially reduced in calendar years 2017 and 2018.
  • The reduction is estimated to be over USD 4 Billion in 2018, with further reduction expected in future years on account of factors like the growing demand for energy and civilian aircrafts in India.
  • This reduction has happened in the face of a rising overall US trade deficit, including with some other major economies.
  • India is also a thriving market for US services and e-commerce companies like Amazon, Uber, Google and Facebook with billions of dollars of revenue.

Way Forward

  • The issue of Indian tariffs being high has been raised from time to time.
  • It is pertinent that India’s tariffs are within its bound rates under WTO commitments, and are on the average well below these bound rates.
  • On developmental considerations there may be a few tariff peaks, which is true for almost all economies.
  • India was agreeable to a very meaningful mutually acceptable package on the above lines to be agreed to at this time, while keeping remaining issues under discussion in the future.

Back2Basics

Generalized System of Preferences

  • The GSP is one of the oldest trade preference programmes in the world and was designed to provide zero duties or preferential access for developing countries to advanced markets.
  • The U.S. GSP programme was established by the U.S. Trade Act of 1974 and promotes economic development by eliminating duties on thousands of products when imported from one of the 129 designated beneficiary countries and territories.
  • In April 2018, the Office of the United States Trade Representative (USTR) announced that it would review the GSP eligibility of India, Indonesia, and Kazakhstan.
  • The proposed review for India was initiated in response to market access petitions filed by the U.S. dairy and medical device industries due to recent policy decisions in India, which were perceived as trade.

Foreign Policy Watch: India-United States

[op-ed snap] A dialogue, an opportunity

Note4Students

Mains Paper 2: International relations | Effect of policies and politics of developed and developing countries on India’s interests, Indian Diaspora.

From UPSC perspective, the following things are important:

Prelims level: Basic knowledge of the India-US trade relations.

Mains level: The news-card analyses the issues and concerns w.r.t India-US trade relations, in a brief manner.


Context

  • The US commerce secretary will be visiting India this week amid the reports of trade tensions between the two countries.

Opportunity to step back from confrontation

  • The US might withdraw India’s trade benefits under the so-called Generalised System of Preferences that Delhi has enjoyed since the mid-1970s.
  • This week’s dialogue must be seen as an opportunity to step back from confrontation and take a more strategic approach to resolving the current differences over a large number of issues.
  • They include market access, reciprocity in tariffs, trade deficit, predictable investment rules and data localisation to mention a few.
  • Over the last two decades, Delhi and Washington have dealt with and resolved far more complex issues.

Issues and Concerns

  1. To recognise the value of the trade relationship between the two countries and its huge potential
  • There was a time, less than two decades ago, when “flat as a chapati” was the preferred label for US-India trade relations.
  • Since then, the annual two-way trade has grown rapidly to touch nearly $130 billion last year (including trade and services).
  • For India, the US is probably the most important trade partner today and will remain so for a long time.
  • For Washington, the size of the trade volume with India is quite low in comparison with its other key partners like Canada, Mexico, the European Union, Japan and China.
  • But the potential remains high as India emerges as the world’s third-largest economy.
  • It should, therefore, be the highest political priority for India and the US to turn this trade relationship into a deeper and more sustainable one.

2. Both countries need to be sensitive to the domestic political considerations

  • As India enters the election mode, this is perhaps the worst possible moment for the US to take actions like the withdrawal of GSP benefits.
  • The volume of Indian exports involved is quite small, but the political impact could be way out of proportion.
  • On its part, Delhi needs to pay greater attention to the profoundly altered environment in Washington on trade related issues.

“Free trade” to “fair trade”

  • Trump has begun to turn America, for long, the champion of “free trade”, into an advocate of “fair trade”.
  • Trump has convinced himself that the rest of the world has taken advantage of America’s open market.
  • He is now ready to bring the whole house down if the rest of the world does not address his grievances.
  • India must bet Trump’s concerns about trade outlast his stint as US president.

3. Turning the two “estranged democracies” into “indispensable strategic partners”

  • It is quite easy to forget the personal role of the Indian prime minister and the US president in turning the two “estranged democracies” into “indispensable strategic partners” in the 21st century.
  • In India, successive Prime Ministers Atal Bihari Vajpayee, Manmohan Singh and Narendra Modi chose to defy conventional political and bureaucratic wisdom to advance the country’s relationship with the US.
  • Washington has little reason to politically embarrass Prime Minister Modi — who has moved the security and political relationship beyond any one’s imagination — on trade issues just before a tough general election.
  • Delhi, on the other hand, should appreciate the great political value of a trade deal with India for Trump and the importance of having the White House on India’s side.

Never stop negotiating

  • Finally, the secret to successful engagement with the US involves two simple propositions — never stop negotiating and keep making deals small or big.
  • India often can’t close a negotiation because it’s opening bid tends to remain the final position.
  • Americans, on the other hand, are always open to splitting the difference, finding a compromise and moving on.

Way Forward

  • It was with the ability to give and take, while keeping the larger and long-term interests in mind, that India and the US were able to overcome the multiple problems in the nuclear and defence negotiations during the last two decades.
  • Continuous forward movement however slow and incremental is critical.
  • Unlike security issues, trade is not a zero-sum-game and should be more amenable to deal-making.
  • Given the return of geopolitical confrontation and the unfolding rearrangement of the global trading order, “doing nothing” is not an option for Delhi.

Foreign Policy Watch: India-United States

[op-ed snap] No zero-sum games on India-U.S. trade hostilities

Note4Students

Mains Paper 2: International relations| Effect of policies and politics of developed and developing countries on India’s interests, Indian Diaspora.

From UPSC perspective, the following things are important:

Prelims level: Basic knowledge of India-US trade relations.

Mains level: The news-card analyses the India-US trade relation in recent times, in a brief manner.


Context

  • There are alarm bells in India over a possible decision by the U.S. Trade Representative to withdraw the Generalised System of Preferences (GSP) status.

Background

  • Under this, India is able to export about 2,000 product lines to the U.S. under zero tariff.
  • Generalised System of Preferences (GSP) was first extended to India in 1976 as part of a global concession by the U.S. to help developing countries build their economies.
  • The revocation of the GSP will be a blow to Indian exporters, and the biggest in a series of measures taken by the Trump administration against India to reduce its trade deficit.

“Unequal tariffs” from India

  • President Donald Trump’s case on what he calls “unequal tariffs” from India rests on the trade relationship in favour of India.
  • Indian exports to the U.S. in 2017-18 stood at $47.9 billion, while imports were $26.7 billion.
  • The measures are in line with Mr. Trump’s campaign promises.

The case of Harley-Davidson motorcycles

  • On the matter of Harley-Davidson motorcycles, Trump spoke directly to Prime Minister Narendra Modi on at least three occasions, demanding that India zero out tariffs to match U.S. rates on Indian motorcycles.

US action against Indian products

  • In March 2018, the U.S. began imposing tariffs on several Indian products.
  • In April, the USTR began a review of India’s GSP status, based on complaints of trade barriers from India it had received from the dairy industry and manufacturers of medical devices.
  • In November the U.S. withdrew GSP status on at least 50 Indian products.

Indian response

  • In retaliation, India proposed tariffs of about $235 million on 29 American goods, but has put off implementing these five times in the past year in the hope that a negotiated trade settlement will come through.
  • The latest deadline expires on March 1.
  • India has also attempted to address the trade deficit with purchase of American oil, energy and aircraft.

Present situation

  • There have been dozens of rounds of talks between officials over the past few months, but no breakthrough.
  • U.S. officials say the decision on data localisation for all companies operating in India, and the more recent tightening norms for FDI in e-commerce have aggravated the situation.

Way Forward

  • Both sides should work towards calling a halt to trade hostilities and speed up efforts for a comprehensive trade “package”, rather than try to match each concern product by product.
  • The U.S. must realise that India is heading into elections, and offer more flexibility in the next few months.
  • India must keep in mind that the larger, global picture is about U.S.-China trade issues, and if a trade deal with the U.S. is reached, India could be the biggest beneficiary of business deals lost by China.
  • The visit of U.S. Commerce Secretary to India this week will be watched not as much for substance, as for signals that New Delhi and Washington understand the urgency in breaking the deadlock.

Foreign Policy Watch: India-United States

U.S. may end zero-tariffs for India

Note4students

Mains Paper 2: IR | Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests

From UPSC perspective, the following things are important:

Prelims level: GSP, New FDI norms

Mains level: Read the attached story


News

  • India could lose a vital U.S. trade concession, under which it enjoys zero tariffs on $5.6 billion of exports to the United States, amid a widening dispute over its trade and investment policies.

US sought action: GSP withdrawal

  1. A move to withdraw the Generalized System of Preferences (GSP) from India,
  2. India is the world’s largest beneficiary of a scheme that has been in force since the 1970s.
  3. However the US plans to the strongest punitive action against India, vowing to reduce the U.S. deficit with large economies.

What is GSP?

  1. Generalized System of Preferences (GSP) is a preferential tariff system under which developed nations extend reduced MFN tariffs (Most Favoured Nation) or duty-free entry of certain goods into their markets, to the developing nations.
  2. The developed countries, or the countries that extend this trade preference are called donor countries, and the benefit-receiving countries are called beneficiary countries.
  3. The GSP is an exemption from the MFN principle under which the WTO members are obliged to treat all other WTO members equally as their ‘most favoured’ trading partner-nation.
  4. GSP benefits Indian exporters indirectly through the benefits that are gained by the importers via reduced tariffs and/or duty-free entry.

Bone of Contention: New FDI norms in E-com

  1. The trigger for the latest downturn in trade ties was India’s new rules on e-commerce that restrict the way of famous e-com sites.
  2. The business in a rapidly growing online market set to touch $200 billion by 2027 if not restricted.
  3. India has courted foreign investment as part of his Make-in-India campaign to turn India into a manufacturing hub and deliver jobs to the millions of youth.
  4. Trump, for his part, has pushed for U.S. manufacturing to return home as part of his Make America Great Again campaign.

What are the new norms?

  1. At the heart of the problem is India’s view on the two e-commerce models that exist today: marketplace and inventory.
  2. India allows 100 percent foreign direct investment (FDI) in the marketplace model of e-commerce, which it defines as a tech platform that connects buyers and sellers.
  3. India has not allowed FDI in inventory-driven models of e-commerce.
  4. The inventory model, which Walmart and Amazon use in the United States, is where the goods and services are owned by an e-commerce firm that sells directly to retail customers.
  5. The restriction is aimed largely at protecting India’s vast unorganized retail sector that does not have the clout to purchase at scale and offer big discounts.
  6. It means that Amazon and Flipkart can only operate the marketplace model in India.

Why put restrictions on E-coms?

  1. The e-commerce giants in India have developed complicated seller structures that helped them comply with the inventory control rule while exercising some level of control over inventory.
  2. Traders and small online sellers have accused them of violating the spirit of the law and of using the structures to offer deep discounts, accusations they deny.
  3. The new rules state that the inventory of a seller or vendor will be seen as being controlled by a marketplace if the vendor purchases more than 25 percent of its inventory from the marketplace, or any of its group firms.
  4. The rule would not allow sellers on these giant e-coms to make bulk purchases from the wholesale units of the companies.

Foreign Policy Watch: India-United States

[op-ed snap] Raja Mandala: Alliances and strategic autonomy

Note4students

Mains Paper 2: IR| Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

From UPSC perspective, the following things are important:

Prelims level: Basics aspects of India’s Foreign Policy .

Mains level: The news-card analyses what should be the Indian Foreign Policy in context of present world order, in a brief manner.


Context

  • Is “non-alignment” a special attribute of Indian foreign policy? Given Delhi’s continuing preoccupation with the idea of non-alignment, most visible recently at last week’s Raisina Dialogue in Delhi, one would think it is.

Background

  • More than a hundred countries are members of theNon-Aligned Movement (NAM). They swear, at least formally, by the idea of non-alignment and show up at the triennial NAM summits. But few of them think of non-alignment as the defining idea of their foreign policies. Even fewer believe it is worth debating on a perennial basis.
  • The governments in Delhi might have been the last, but they have certainly moved away from the straitjacket of non-alignment — in practice if not in theory.

Issue

India is now “aligned”

  • The rhetoric has changed under the present government. As Foreign Secretary Vijay Gokhale put it in response to a question at the Raisina Dialogue, India is now “aligned”. “But the alignment is issue-based. “It is not ideological. That gives us the capacity to be flexible, gives us the capacity to maintain our decisional autonomy.”
  • If non-alignment belongs to the past, is “strategic autonomy” something unique to India? It isnot really. All countries, big and small, try to maximise their freedom of action.
  • And the autonomy that a nation can exercise depends on its specific circumstances such as size, location, comprehensive national power, and the nature of the threats among many other things.

The “independent” and “dependent” foreign policy

  • Take, for example, Pakistan. In Delhi’s foreign policy mythology — India chose an “independent” foreign policy and Pakistan a “dependent” one.
  • As the Cold War between America and Soviet Russia enveloped the world soon after Partition and Independence in the middle of the 20th century, India and Pakistan seemed to take opposite diplomatic paths.
  • India embraced non-alignment and refused to endorse America’s anti-Communist alliances.
  • Pakistan pooh-poohed non-aligned solidarity, calling it “zero plus zero is equal to zero”. It signed a bilateral defence pact with the US and joined the two regional security blocs — called Central Treaty Organisation (CENTO) in the Middle East — and the South East Asia Treaty Organisation (SEATO) in the Far East.

How then this change in stance?

  • The seeming ideological clarity that both India and Pakistan brought to their respective foreign policies dissolved quickly in the real world.
  • India, which had refused to join the West in isolating communist China and sought to befriend it, ended up in a conflict with Beijing. And when the border war broke out in 1962, India turned to the United States for military assistance.
  • Pakistan, which was quick to join the anti-Communist bandwagon did not take long to discover the convergence of interests with Maoist China.
  • Pakistan’s delegation went into the Afro-Asian summit at Bandung, Indonesia, in 1955 with an anti-China orientation. It returned with an understanding of Pakistan’s shared interests with Beijing on balancing India.
  • The Chinese premier Zhou Enlai convinced Pakistan leader Mohammed Ali Bogra that Communist China is not a threat to Pakistan. Bogra, in turn, made it clear that Pakistan’s problem is not with communist expansion in Asia but with India.
  • The rest — the making of a very special bilateral relationship — is history. China has rarely complained since about Pakistan’s long-standing military relationship with the US.

Strategic Autonomy

  • That Pakistan could warm up to China so soon after it joined America’s anti-Communist alliances in Asia is probably one of the most impressive examples of exercising “strategic autonomy”. It was so successful that Pakistan became a bridge between China and the US at the turn of the 1970s.
  • Indian foreign policy community continues to be troubled by the question of alliances and autonomy when it comes to dealing with China and the US. It could, perhaps, find a thing or two from Pakistan that has managed these relationships quite well.

New Delhi’s fear of Alliances

  • Delhi’s traditional fear of alliances is based on a profound misreading of what they might mean.
  • Alliances are not a “permanent wedlock” or some kind of a “bondage”. They are a political/military arrangement to cope with a common threat. When the shared understanding of the threat breaks down, so does the alliance.
  • A couple of examples. To cope with the American threat Mao Zedong aligned with Soviet Russia in 1950. Two decades later, he moved closer to America to counter Russia. Now China is once again buddies with Russia in trying to limit American influence in Eurasia.
  • When Communist China walked into Tibet in 1949, the monarchy in neighbouring Nepal got India to sign a treaty in 1950 offering protection. Not too long after, Kathmandu figured China is not a threat and began to undo the security provisions of the 1950 treaty.

Conclusion

  • Not many countries in the world today are members of alliances. The few alliances that have survived since the Second World War are undergoing stress on the supply as well as demand side.
  • In America, President Donald Trump is questioning the costs and benefits of these alliances.
  • Presidents Tayyip Erdogan of Turkey and Moon Jae-in of South Korea, both treaty allies of the US, hardly share American perceptions on the regional threat in the Middle East and the Korean Peninsula respectively.
  • Indiais a large and globalised economy with “big stakes in all parts of the world”.
  • The Indian foreign policy debate would be less metaphysical if it stops obsessing about “non-alignment” and “strategic autonomy” and starts focusing on a pragmatic assessment of India’s interests and the best means to secure them — including partnerships and coalitions — against current and potential threats.

Foreign Policy Watch: India-United States

Trump Signs Asia Reassurance Initiative Act Into Law

Note4students

Mains Paper 2: IR | Bilateral, regional & global groupings & agreements involving India &/or affecting India’s interests

From UPSC perspective, the following things are important:

Prelims level: ARIA Act

Mains level:  US influence in Asia-Pacific


News

  • US President Trump has signed an Act designed to counter the encroaching influence and growing threat from China and to reinvigorate US leadership in the Indo-Pacific region.

Asia Reassurance Initiative Act (ARIA)

  1. The ARIA aims to establish a multifaceted U.S. strategy to increase U.S. security, economic interests, and values in the Indo-Pacific region.
  2. ARIA draws attention to U.S. relations with China, India, the ten member states of the Association of Southeast Asian Nations (ASEAN), and Northeast Asian allies Japan and South Korea.
  3. It will authorize $1.5 billion in spending for a range of U.S. programs in East and Southeast Asia and develop a long-term strategic vision and policy for the Indo-Pacific region.
  4. The ARIA includes multiple provisions of Trump which have identified the Indo-Pacific as a strategic region of particular priority.

Regional Perspective

  1. North Korea: The act aims to justify the termination of U.S. support for any UNSC resolutions sanctioning North Korea or the lifting of any unilateral U.S. sanctions on North Korea.
  2. Taiwan: The ARIA encourages the travel of high level US officials to Taiwan, in accordance with the Taiwan Travel Act which was made law in 2018.
  3. South China Sea: ARIA calls on the US to support the ASEAN nations as they adopt a code of conduct in the South China Sea with China.

Impact on ties with India

  1. ARIA allocates a budget of $1.5 billion over a five-year period to enhance cooperation with America’s strategic regional allies in the region.
  2. Stressing the designation of India as a major defense partner, which is unique to India, the new law elevates defense trade and technology cooperation.
  3. The new law cites China’s illegal construction and militarization of artificial features in the South China Sea and coercive economic practices.

Other perspectives

  1. The Act notes the increased presence throughout Southeast Asia of the Islamic State and other international terrorist organizations that threaten the US.
  2. The law also refers to Quadrilateral Security Dialogue between US, Australia, India, and Japan.
  3. It however clarifies that such a dialogue is intended to augment, rather than to replace, current mechanisms.
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