Impasses span multiple industries

An authoritative report in the United States has suggested that India and US should chart a map toward a Free Trade Agreement as recent negotiations have failed, putting such a pact out of reach in the immediate future.

The report, “Trade at a Crossroads: A Vision for the US-India Trade Relationship”, said two governments should:

✽ manage current conflicts and reach an initial agreement;
✽ review and improve institutional underpinnings;
✽ recommit to the Trade Policy Forum and pursue institutional reform;
✽ replicate recent cooperative success;
✽ explore opportunities for significant market opening agreements; and
✽ chart a map toward an FTA.

The report was released on 15 July 2019 by Atlantic Council South Asia Centre and US-India Strategic Partnership Forum.

The United States–India trade relationship is rapidly approaching a point of crisis, it highlighted in the opening executive summary.

The report’s executive summary:

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.

Disputes have continued to escalate despite historic growth in bilateral trade and exchange of people.

Impasses span multiple industries and indicate the presence of deeply rooted disagreements that necessitate dialogue to address. An examination of the institutional structures underpinning the relationship is required to move forward and salvage an otherwise promising partnership.

Several key issues contribute to current tensions:

✽ Limited capacity of the Trade Policy Forum (TPF) to convene high-level officials and promote government-to-government engagement.

✽ A lack of authority for the Indian Ministry of Commerce and Industry (MOCI) to negotiate and commit to solving bilateral problems.

✽ A lack of alternatives to bilateral negotiation and conflict management. The World Trade Organization (WTO) is not a suitable venue for negotiating and overcoming multiple bilateral trade differences. The United States and India have historically been at odds in the WTO, and the dispute-settlement process can be prohibitively slow.

✽ A lack of the trust and rapport necessary for negotiating teams to pursue meaningful or long-term agreements. Trade negotiations outside the WTO with measurable outcomes generally involve free-trade agreements (FTAs). The recent breakdown in negotiations over a small, limited agreement reinforces that a US-India FTA is out of reach in the immediate future.

Political and economic realities require these issues to be addressed and these challenges overcome.

India is rapidly emerging as a global economic power in a region of key strategic interest to the United States.

The United States-India relationship will be one of the most consequential of the twenty-first century, and commerce will play a vital role in determining whether it is constructive or adversarial.

Issues including standards and conformity assessment testing, digital trade, healthcare, and agricultural trade present areas of emerging conflict or opportunities for cooperation. 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.

The authors of this report, Mark Linscott, Trevor Cloen and Nidhi Upadhyaya, believe it is vital that both governments take steps to mitigate short-term disagreements and establish a more constructive relationship in the medium and long runs. fiinews.com