Trade and climate, the pivot for India-U.S. ties

News: The climate and trade and its interplay have a huge potential in strengthening further relationship between India and USA. However, issues needs to be tackled to realize that potential.

India and the USA have forged a strategic relationship over time. Their recent cooperation in creating a free and open Indo-Pacific advancing democratic values and confronting autocracies has given much boost to the partnership.

However, relatively less explored areas of climate and trade needs to be tackled. More areas need to be worked upon.

What are the areas of convergence for the two nations?

China is viewed by both as a strategic competitor. The shared concerns about China provide the U.S.-India partnership a much-needed impetus. However strategic partnerships cannot be based simply on a negative agenda.

Climate and trade- Besides the ongoing ones, the further path of relationship depends on how well India and US collaborate in two less explored areas— climate and trade.

How India and US are collaborating on climate and trade?

Climate-The U.S. Special Presidential Envoy for Climate has visited India twice. India and the U.S. are also collaborating under the Climate and Clean Energy Agenda Partnership.

Trade-Both countries are now prioritising the bilateral trade relationship by rechartering the Trade Policy Forum.

What are the challenges and threats to a long term Indo-US partnership?

India’s rhetoric of climate justice, especially with China, has not been given due importance by US.

The failure of the U.S. and India to articulate a shared vision for a comprehensive trade relationship has been seen. Protectionist tendencies infect the politics of both countries these days.

An immediate threat could be the possibility of tensions were India insists that technology is transferred in ways that undermine incentives for innovation in both countries.

Other threat could be if the U.S. decides that imports from India be subject to increased tariffs in the form of carbon border adjustment mechanisms(CBAM’s).

What is the way forward?

Solar panel trade– Both countries should align their climate and trade approaches, starting with a resolution of their disputes in the WTO on solar panels.

Ethanol trade– India currently bans imports of fuel ethanol.The two countries could chart a path that allows trade to flow for energy sources, such as fuel ethanol.

Concerted action on both the climate and trade fronts is mutually beneficial and will lend additional strength to the foundation of a true partnership for the coming century.

Source: This post is based on the article “Trade and climate, the pivot for India-U.S. ties” published in The Hindu on 03 November 2021.