Putting trade ties on a new footing

The future looks bright for U.S.-India trade, but it may not be any easier

Updated - November 27, 2020 01:27 am IST

Published - November 27, 2020 12:15 am IST

Representational image only.

Representational image only.

It goes without saying that the Joe Biden administration will be a far cry from what we have seen over the last four years. This will include its trade policies, although it may not be a radical departure altogether from the Trump administration. Certainly, there will be a more constructive stance on multilateral issues in the World Trade Organization (WTO). That should be welcome, as the Trump administration went out of its way in seriously undermining WTO institutions when the organisation was already on the ropes, although admittedly in need of reform and new direction. In bilateral trade policies, the Biden administration is likely to emphasise enforcement, and that will not differ so much, although it is less likely to engage in unilateral tariff increases and more likely to pursue remedies in the WTO.

For India, what might this mean? The Trump administration appeared to be interested in prioritising the trade relationship, as it pursued an aggressive approach to resolve market access concerns through threats to eliminate India’s benefits under the Generalized System of Preferences programme. However, the follow through was weak. The administration was on the brink of concluding a historic bilateral trade deal, yet it lost focus. Will the Biden administration resume these negotiations? Will it pursue new avenues for better aligning the trade relationship with the growing strategic one? Or will it revert to the approaches of previous administrations in putting trade issues with India on the back burner?

Also read | Close to limited trade deal with U.S., says Piyush Goyal

Five likely developments

I see five likely dynamics that could build on the early efforts of the Trump administration to raise the profile of U.S.-India work on trade but also mark substantial departures from the circumstances of the last four years. One, it is clear that Mr. Biden plans to focus on domestic concerns first, particularly in implementing a coherent COVID-19 policy. There may be trade aspects to some of these efforts, but they may have limited early relevance for a future U.S.-India trade policy.

Two, as it turns to trade policy, the Biden administration is not likely to place India among its top few priorities. A first question is whether it should prioritise concluding Free Trade Agreement (FTA) negotiations with the U.K. in April before the Trade Promotion Authority expires. Other top priorities will include fixing pending WTO issues, resolving the Airbus-Boeing dispute with the European Union, and of course formulating its approach with China, such as finding alternatives to the Regional Comprehensive Economic Partnership to set new global standards that address China’s practices. That said, India should be among the priorities at the next level down.

Three, the trade deal still pending with the Trump administration remains compelling. There could be an early opportunity to conclude these negotiations and for the Biden administration to get credit. Looking ahead, a bilateral deal will not lead to serious consideration of FTA negotiations any time soon. But this first trade agreement could pave the way for later additional small agreements.

Also read | Trade deal with U.S. delayed, not stuck, says government

Four, the existing Trade Policy Forum (TPF) met only once over the last four years, as negotiations on a trade deal sucked all the air out of the room. It seems likely that the Biden administration will see the TPF’s value as a venue for more regular discussions on a range of trade issues.

Finally, a reinvigorated TPF will present new opportunities for the two countries to take up a range of cutting-edge trade issues that will be critical in determining whether the U.S. and India can converge more over time or will drift further apart. These include digital trade issues, intellectual property rights and approaches to nurturing innovation, better health sector alignment, and more regular regulatory work on science-based agricultural policies.

The future looks bright for U.S.-India trade under a Biden administration, but that does not mean it will be any easier. It will be critical for leadership on both sides to commit to strong efforts to put the trade relationship on a new footing, which will have to involve a ‘can-do’ attitude to solving problems.

Mark Linscott is Senior Fellow at The Atlantic Council and former senior U.S. trade official

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