India needs to stand firmly against Donald Trump’s US trade policy by making wise and sensible alliances
India needs to tread carefully without losing sight of its core trade-related priorities. Given the dark protectionist clouds arising from the trade war, India faces several challenges in agriculture, industrial goods, and services. Its main adversary in global farm trade remains the US which has repeatedly undermined New Delhi’s developmental initiatives for reforming rules governing global farm trade.
Washington has repeatedly blocked multilateral instruments such as the special safeguard mechanism and the permanent solution for public stockholding programmes for food security. Recently, the US, at the behest of its powerful farm trade lobbies, alleged that India’s farm support programmes for rice and wheat breached its World Trade Organization commitments.
Consequently, India needs to build a strong alliance with China and other developing countries facing similar threats to their agriculture from the fat-cat farmers in the US.
Besides, Indian farm exporters can export soybean and dairy products among others out of opportunities arising from the trade war.
As for industrial goods, India faces a rough trading environment for exports of textiles and clothing goods, steel and aluminium, and generic drugs among others. The US is insisting that India must provide reciprocal market access in return for realizing the generalized system of preferences (GSP) which under the multilateral rules is a non-reciprocal programme.
The US wants substantial market access for dairy products and medical devices.
Such egregious demands from the US will impinge adversely on the millions of small dairy producers and result in exorbitant prices for medical devices which India’s disease-burdened population can hardly afford. In services, where India has a clear comparative advantage, Trump’s America First trade policies have led to numerous barriers for short-term services providers, particularly India’s vast IT professionals.
Therefore, India needs to stand firmly against Trumpian trade policies by making wise and sensible alliances with countries based on its core trade interests. For a country like India, there are no real friends, nor enemies, in global trade.
The biggest folly that the Modi government must avoid at all costs is to enter into a free trade agreement with its principal trade adversary given the historical record of extortionist demands and unmet promises.