US policy wise : Visa, Free Trade and WTO

Jun, 24, 2019

[op-ed snap] Clouds of war

CONTEXT

U.S. President Donald Trump’s decision to pull back from air strikes on Iran, after the latter shot down an American drone near the Strait of Hormuz, was a rare moment of restraint amid otherwise escalating tensions between the two countries.

Background 

  • The rationale behind the pull-back, according to Mr. Trump, was that he did not want to cause any loss of Iranian lives as no American lives were hurt by the Iranians.
  • Avoiding open conflict – Clearly, Mr. Trump, who had campaigned against the costly wars of the U.S. overseas, does not seem to be in favour of launching an open conflict with Iran.
  • Iran’s Strengths – A war with Iran could be prolonged and disastrous. Iran has ballistic missiles, proxy militias and a relatively vibrant navy.
  • And the Strait of Hormuz, through which one-third of the world’s seaborne oil shipments move, is within its range.
  • Mr. Trump does not want to take a risk unless there are provocations from Iran targeting American lives.
  • Maximum pressure – While this approach is better than that of Mr. Trump’s National Security Adviser, John Bolton, who has threatened Iran with war several times, what the U.S. President overlooks is that the current state of tensions is a product of his “maximum pressure” tactic.
  • A year ago Mr. Trump pulled the U.S. out of a nuclear deal with which Iran was fully compliant, setting off the escalation.
  • His plan was to squeeze the Iranian economy and force Tehran back to the table to renegotiate the nuclear issue as well as Iran’s missile programme and regional activism, for a “better deal”.
  • A year later, the U.S. and Iran are on the brink of a war.

Issues with maximum pressure

  • The problem with Mr. Trump’s “maximum pressure” approach is that he doesn’t seem to have a plan between the sanctions-driven pressure tactics and a potential military conflict.
  • Iran, on the other hand, is ready to take limited risks, as its actions such as the threat to breach the uranium enrichment limits set by the nuclear deal and the downing of the American drone suggest, to break the stranglehold of the sanctions.
  • As a result, Mr. Trump has a situation where maximum pressure is not producing the desired result, and both countries are edging towards a war he doesn’t want.
  • This is a strategic dilemma that warrants a recalibration of policy.
  • Mr. Trump’s decision to call off the strike and the new red line he set for Iran could create an opportunity for such a recalibration.
  • He could seize the moment to assure Iran that his primary goal is engagement, not conflict.

Way Forward

  • What Iran wants the most is relief from the sanctions.
  • Instead of sticking to a policy that has proved to be counter-productive and risky, Mr. Trump could offer Tehran some reprieve in return for its remaining in the nuclear deal, which could be followed up by a fresh diplomatic opening.
  • If he continues with the pressure tactics, tensions will stay high, the Strait of Hormuz would be on the brink, and further provocations by either side, or even an accident, could trigger a full-scale conflict.
  • That is a dangerous slope.
Oct, 24, 2018

U.S. to pull out of Russia missile pact

Note4students

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

From UPSC perspective, the following things are important:

Prelims level: INF Treaty

Mains level: Changing dynamics of international nuclear politics and its impact on India


News

US to pull out of Cold War-era INF treaty

  1. S. has confirmed that it would pull out of the Intermediate-range Nuclear Forces (INF) Treaty with Russia.
  2. INF is a crucial Cold War-era treaty banning the development, testing and possession of short and medium range ground-launched nuclear missiles with a range of 500-5,000 km.
  3. The treaty, signed in 1987, was central to ending the arms race between the two superpowers, and protected America’s NATO allies in Europe from Soviet missile attacks.

Amid allegations

  1. At issue is Russia’s alleged development and deployment of the Novator 9M729 missile, also known as the SSC-8 that could strike Europe at short notice.
  2. The U.S. administration, under Obama raised the issue of Russia testing a ground-launched cruise missile with Russian President Vladimir Putin in 2014.
  3. The Russians denied the allegations and raised counter-allegations of the U.S. installing missile defence systems in Europe.
  4. While the two countries failed to find a resolution using the dispute resolution mechanism in the treaty, the U.S. continued to remain party to the treaty under pressure from its European allies.

Implications of US’s unilateral Move

  1. A withdrawal will allow the U.S. new weapon options in the Pacific in its efforts to counter China’s growing influence.
  2. There are also concerns that the treaty’s end could mark the beginning of a new arms race between the U.S. and Russia.
  3. The US has been unilaterally withdrawing from all sorts of agreement and mechanisms from the Iran deal to the International Postal treaty.
Sep, 25, 2018

India to focus on climate change, South-South cooperation at U.N.

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: G-4, UNGA

Mains level: Issues related to the UN after US defiance of several UN bodies.


News

73rd UNGA meet

  • External Affairs Minister has kicked off her week-long diplomatic engagements at the United Nations General Assembly (UNGA).

Highlights of the Assembly

  1. The 73rd UNGA is taking place against the backdrop of increased American hostility towards the world body in particular and multilateralism in general.
  2. US believe that multilateral global bodies and treaties function to the detriment and at its cost.
  3. The U.S has reduced its funding for the U.N. and either withdrawn or threatened to withdraw from several U.N. bodies under the Trump presidency.
  4. Trump is, however, seeking more support for his combative stance against Iran, from member countries.

Addressing leadership vacuum at UN

  1. With America rolling back its interest in global security and development, under the Trump administration, the Security Council’s prominence has diminished.
  2. While America is on retreat, no other country is stepping up to fill the leadership vacuum in the U.N.

India’s focus

  1. The EAM’s meetings will focus on issues such as climate change, digital infrastructure, and sustainability and South- South cooperation.
  2. These are areas that India has interests and expertise in.
  3. India will discuss strengthening cooperation in areas of commerce, pharma, cybersecurity, defence and culture.

Back2Basics

G4 Nations

  1. The G4 nations comprising Brazil, Germany, India, and Japan are four countries which support each other’s bids for permanent seats on the United Nations Security Council.
  2. Unlike the G7, where the common denominator is the economy and long-term political motives, the G4’s primary aim is the permanent member seats on the Security Council.
  3. Each of these four countries have figured among the elected non-permanent members of the council since the UN’s establishment.
  4. Their economic and political influence has grown significantly in the last decades, reaching a scope comparable to the permanent members (P5).
  5. However, the G4’s bids are often opposed by the Uniting for Consensus movement, and particularly their economic competitors or political rivals.
Jun, 25, 2018

GSP: win-win for Indo-U.S. trade

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: Read the attached story


News

Big impact for Exporters to US

  1. For over 40 years, GSP has fulfilled its purpose of promoting economic growth in a large number of developing countries by allowing increased exports of eligible products.
  2. This tremendous benefit to the global economy is a small aspect of the U.S. trade balance; for example, of the total $2.4 trillion U.S. imports in 2017, only amounting to less than 1% of total U.S. imports.
  3. Despite GSP’s low significance in the U.S. trade balance, its benefits ultimately help U.S. consumers and exporters by contributing to lower pricing of final products.
  4. It is important to note that Indian exports to the U.S. under the GSP programme are mostly intermediaries, and are not in direct competition with U.S. producers — ultimately, these goods benefit the U.S. economy.

Role of Indian Exports

  1. Most of the 3,500 Indian products imported by the U.S. under the GSP are raw materials or important intermediaries of value chains.
  2. In many cases, Indian exports are less-expensive, high-quality alternatives that reduce the costs of final products, thereby creating value that is subsequently exported the world over by U.S. companies or directly conveyed to the U.S. consumer.
  3. Most of these products are intermediate goods, many of which are not competitively produced in the U.S. given their lower role in manufacturing value chains.
  4. Indeed, this enables the U.S. economy to be more globally competitive.

GSP should be continued

  1. Despite continued economic growth over the last two decades or so, India is a lower middle-income country.
  2. GSP allows Indian exporters a certain competitive edge and furthers the development of the country’s export base.
  3. It also allows India to integrate with global value chains (GVC) and hence, with global markets.
  4. These advantages provide opportunities for small enterprises and help in the overall livelihood creation endeavor in India.
  5. In addition to the economic perspective, the U.S. should consider continuing India’s GSP eligibility as a gesture of goodwill that reaffirms its commitment to the mutually beneficial relationship between our two countries.
  6. The India-U.S. relationship has continued to grow stronger as India liberalizes along a positive and steady trajectory.

Way Forward: Balancing Trade with the US

  1. India has made systematic efforts to reduce trade imbalance with the U.S. and has enhanced purchases of shale gas and civilian aircraft.
  2. Adhering to the rules-based international trading system, India is in the process of examining its export subsidies.
  3. As per a CII survey, the U.S. remains a favored destination for Indian companies which have invested $18 billion in the U.S. and support as many as 1.13 lakh jobs.
  4. Today, our two countries engage in countless areas of mutual cooperation, and a supportive stance in recognition of our greater goals and shared values would promise significant progress in the future.
  5. The GSP remains a central aspect of the overall trade engagement and must remain available for Indian exporters keen to address the U.S. markets.

Back2Basics

Generalised System of Preferences

  1. 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.
  2. 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.
  3. 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.
  4. 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 barriers.
Apr, 18, 2018

India takes US steel tariff issue to WTO’s safeguards committee

Note4students

Mains Paper 2: IR | Important International institutions, agencies & fora, their structure, mandate

From UPSC perspective, the following things are important:

Prelims level: WTO, committee of safeguards, dispute settlement mechanism

Mains level: India-US trade war and its implications


News

Seeking consultation on higher tariffs

  1. India has raised the issue of US imposing higher tariffs on certain steel items at the committee of safeguards of the World Trade Organisation (WTO) seeking consultation
  2. The move came after failing to get an exemption on tariff hikes by the Donald Trump administration

Background

  1. On 8 March, the United States issued a presidential proclamation indicating that steel articles are being imported into US in such quantities as to threaten to impair its national security
  2. To address this situation, the US imposed a 25% tariff on certain steel articles with effect from 23 March

Effect of taking the issue to safeguards committee

  1. India can only “name and shame” the US by raising the matter in the safeguards committee as the panel does not have any adjudicating power
  2. The US may also claim that its move is not a safeguard measure as it has imposed the higher tariffs on steel and aluminum invoking national security provision
  3. For seeking compensation of business loss, India needs to drag the US to the dispute settlement mechanism

Back2Basics

WTO dispute settlement mechanism

  1. Dispute settlement is regarded by the World Trade Organization (WTO) as the central pillar of the multilateral trading system, and as the organization’s “unique contribution to the stability of the global economy
  2. A dispute arises when one member country adopts a trade policy measure or takes some action that one or more fellow members considers to a breach of WTO agreements or to be a failure to live up to obligations
  3. The operation of the WTO dispute settlement process involves the parties and third parties to a case and may also involve the DSB panels, the Appellate Body, the WTO Secretariat, arbitrators, independent experts, and several specialized institutions
  4. The General Council discharges its responsibilities under the DSU through the Dispute Settlement Body (DSB)
  5. Like the General Council, the DSB is composed of representatives of all WTO Members
  6. By joining the WTO, member countries have agreed that if they believe fellow members are in violation of trade rules, they will use the multilateral system of settling disputes instead of taking action unilaterally
  7. This entails abiding by agreed procedures (Dispute Settlement Understanding) and respecting judgments, primarily of the Dispute Settlement Body (DSB), the WTO organ responsible for the adjudication of disputes
Dec, 04, 2017

U.S. pulls out of UN’s pact on migration

Note4Students

Mains Paper2 | Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests

The following things are important from UPSC perspective:

Mains level: The USA has withdrawn from United Nations Global Compact on Migration. Migration has become an important topic for Mains.


News

Context

  1. The USA has withdrawn itself from a United Nations pact that is, Global Compact on Migration to improve the handling of migrant and refugee situations, deeming it “inconsistent” with its policies.
  2. But USA would continue its “generosity” in supporting migrants and refugees around the world.

New York Declaration for Refugees and Migrants

  1. In September 2016, the UN General Assembly adopted a non-binding political declaration, the New York Declaration for Refugees and Migrants, pledging to uphold the rights of refugees, help them resettle and ensure they have access to education.
Apr, 15, 2016

U.S. visa fee increase discriminatory: FM

  1. Context: Finance Minister Jailtey’s meeting with US Trade Representative
  2. News: India has expressed concern over the hike in visa fee by the US, which is discriminatory and in effect is largely targeted at Indian information technology companies
  3. Background: Last year, the US Congress imposed a special fee of up to $4,500 on H-1B and L-1 visas to fund the healthcare Act and biometric tracking system
  4. Future: He also underlined the need for early conclusion of Totalisation Agreement which would benefit Indians working in America
Apr, 08, 2016

H1B visa: Caps met, lottery to decide 85,000 new skilled immigrants

  1. News: The applications for H1B visa category exceeded the cap of 85,000 fixed for the fiscal year 2017
  2. Of the total cap of 85,000 visas, 20,000 are under a special category called advanced degree exemption
  3. Major Players: Indian IT companies such as TCS, Wipro, Infosys and Cognizant along with Microsoft and Google that recruit resources from India
  4. Fact: In 2014, 86% of the new H1B visas issued were to Indians
Mar, 05, 2016

India invokes dispute with US at WTO over visa fees

  1. Context: India has set off a major trade dispute with the US at WTO
  2. Why? Escalation of visa fees for L-1 and H-1B of short-term service providers & limits on their numbers
  3. Argument: Treatment accorded to juridical persons of India with a commercial presence in the US under Mode 3 of GATS are against US’ scheduled specific commitments
  4. Mode 3 of GATS: WTO members are allowed to have a commercial presence in member countries, depending on the specific binding commitments made in their schedules
Mar, 05, 2016

India takes on U.S. at WTO over visa rules

  1. Context: Increase in fees for temporary work visas, affecting Indian workers
  2. News: India has filed a complaint to the WTO against the US over its measures raising fees on some applicants for temporary work visas, mostly involving the tech sector
  3. Reason: Indians receive unfair treatment compared with Americans in the US in providing similar services in sectors like computer services
  4. Criticism: US measures are not consistent with its commitments to accept services from other countries

Learn more about World Trade Organisation and H1B Visa.

Dec, 28, 2015

IT sector worried; India to take up visa fee with U.S.

Industry could take a $400-mn hit a year because of the hike.

  1. India will schedule discussions with the U.S. to raise its concerns over the Obama administration’s recent decision to hike visa fees.
  2. India will consider retaliatory measures and even explore the possibility of dragging the U.S. to the WTO’s dispute settlement body.
  3. India is the largest user of H1B visas (67.4 per cent) and is also among the largest users of L1 visas (28.2 per cent).
  4. India’s export of computer services and ITES/BPO services was around $82 billion, of which exports to the U.S. and Canada accounted for nearly 60 per cent.
Dec, 18, 2015

Special fee for H1B and L1 visas

  1. In 2010, the US had started a $2,000 fee for H1 B visas but the number of people taking it has only been on the rise, the 2010 Bill lapsed on October 1.
  2. The new Bill makes it valid until September 2025, for 10 years, though terms the fee temporary.
  3. According to NASSCOM, the $2,000 fee is used to raise $70-80 million annually.
  4. A part of money raised will fund health care and implementation of a biometric entry and exit data system.
Dec, 17, 2015

Modi talks to Obama over H1B, L1 visa concerns

PM Modi shared with U.S. President, the concerns of Indian IT industry on the proposed legislation in the U.S. Congress relating to popular H1B and L1 visas.

  1. Indian IT companies in the U.S. may end up paying a special $2,000 fee again on the popular H1B and L1 visas to fund a 9/11 health care act.
  2. According to the NASSCOM, Indian companies had paid between USD 70 to 80 million per annum between 2010 and 2015.
  3. The extra fee applies to companies with at least 50 per cent of their employees on H-1B visa or L-1 visas, and is in addition to the other fees paid by employers.
  4. Because of its 50 per cent threshold, it mostly hits the large Indian IT services firms, the leading users of the H-1B visa.
Nov, 25, 2015

Milestone for H-1B, a passport to the American dream

A large number of Indian IT professionals have been issued the visa over the years.

  1. A digital arts exhibition on the H-1B visa has opened at the world’s largest museum in the U.S. to mark the 25th anniversary of the popular work permit falling on November 29.
  2. South Asian and Asian American artists explore America’s immigration story through this visa.
  3. Our H-1B visa exhibition explores a historic part of the American story from the perspective of South Asian Indians.
  4. Several generations of young scientists and engineers from all over Asia had come to be part of a “New America” and shape the United States’ culture of innovation and entrepreneurship.
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