From state visit to a more robust trade relationship

Source: The post is based on the article “From state visit to a more robust trade relationship” published in “The Hindu” on 3rd August 2023.

Syllabus: GS2- Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests

News: In this article author discusses the historic visit of India’s Prime Minister to Washington. They highlight the growing U.S.-India partnership, especially in defense and technology. However, the trade relationship, though improving, hasn’t reached its potential. Both nations should prioritize creating a strong Free Trade Agreement to maximize benefits.

About India-US trade

Historic Visit: India’s PM 2023 visit to Washington strengthens U.S.-India relations.

Current Trade: Exceeds $120 billion.

U.S. Approach: Shifted from traditional FTAs, emphasizing resilient supply chains and labor rights.

Enhancing Relations: Resolved six WTO disputes during India’s PM US visit; potential for a major Free Trade Agreement.

Agriculture Trades: Exchanges like mangoes for India and cherries for the U.S. without an FTA.

Trade Potential: By prioritizing, bilateral trade could reach $500-$600 billion by 2030.

What is the U.S.’s current trade approach?

Shift from FTAs: The U.S. has evolved away from Free Trade Agreements.

Supply Chain Focus: Emphasis on creating resilient supply chains.

Reshoring and Friend-shoring: Aim to bring production back to the U.S. or move to friendly countries.

Labor and Environment: Prioritizing labor rights and environmentally friendly production over traditional globalization.

Skeptics’ Views: Many believe the U.S.’s goals could be better achieved with a revamped FTA strategy.

How can both countries enhance their trade relationship?

Resolve Disputes: During recent India’s PM US visit, six disputes under the World Trade Organization were settled.

Explore FTAs: Both countries should consider major Free Trade Agreement negotiations.

Utilize Past Successes: Examples include small trade deals like exchanging mangoes, pomegranates from India for U.S. cherries, hay, and pork.

Agriculture Opportunities: India has shown willingness to open its agricultural market in exchange for concessions, as seen with Australia gaining access for wine, wool, and sheep meat.

Work Towards Major Agreements: Initiating negotiations for a comprehensive Free Trade Agreement could cover a wider range of goods and services.

Stronger Leadership Mandate: Trade needs more attention from both Biden and Modi administrations for better outcomes.

Set Ambitious Goals: Aiming for $500-$600 billion in bilateral trade by 2030 is possible with a focused approach.