India and US bilateral trade at crossroads: Report

India and the US need to “prioritize efforts” to manage current trade tensions and initiate cooperative projects in areas like intellectual property rights and digital trade, according to a report by a former trade official from the Trump administration.

The report, ‘Trade at a Crossroads: A Vision for the US-India Trade Relationship’, said it was clear that the first priorities for the future should be to manage current challenges and address those that were likely immediately ahead.

Authored by Mark Linscott, former assistant, US Trade Representative for South and Central Asian Affairs, the report is produced jointly by the Atlantic Council and the US India Strategic and Partnership Forum (USISPF).

It provides an expert analysis of the current state of the relationship, including recent negotiations and recommendations for the path forward in the short, medium, and long-term.

There is no easy way to sugarcoat the present state of the relationship — it is one in which the only common denominator is a fundamental misunderstanding of priority objectives on the other side, which has led to misalignment of expectations in recent negotiations, the report said.

The talks have started at the direction of Prime Minister Narendra Modi and President Donald Trump who met in Japan last month on sidelines of the G-20 Summit.

The report counsels that India and the United States redouble their efforts to go down a path of constructive engagement that can lead, in the short term, to a first-ever bilateral trade agreement.

In parallel, it said, the two can explore new areas for bilateral engagement, with the objectives of continually building new confidence, gradually aligning their visions for opportunities to open their markets to each other, and growing trade and investment at an accelerated pace.

The report recommends that the two governments should manage current conflicts and reach an initial agreement; review and improve institutional underpinnings; recommit to the TPF and pursue institutional reform; replicate recent cooperative success; explore opportunities for significant market-opening agreements, and chart a map toward an FTA.

Observing that the United States–India trade relationship is rapidly approaching a point of crisis, the report says that institutional arrangements are unable to address evolving and growing trade irritants, while protectionist instincts in both governments are exacerbating tensions.

“Recent failures to reach even a small agreement, and subsequent tit-for-tat escalations, now place the relationship at a tipping point,” it said.

“While the history of bilateral trade negotiations has often been contentious, it also includes examples of constructive cooperation. These examples should serve as inspiration in addressing today’s challenges,” it said.

The United States was the second-largest trading partner for India in goods in 2018 and the single largest export destination for Indian exporters.

Bilateral trade in goods and services grew at an average annual rate of 7.59 percent from 2008-2018, double in value from USD 68.4 billion to USD142.1 billion.

Leave a Reply