Trade and climate play important role in India-U.S. ties

Trade and climate play important role in India-U.S. ties

GS II - Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests

  • The relationship between India and US in fact depend substantially on how well they collaborate in two areas— climate and trade.
  • The first presents an existential threat while the second is too often dismissed as a secondary consideration, even dispensable in the name of pursuing larger strategic interests. Such thinking ignores the lessons of history: strategic partnerships capable of re-shaping the international global order cannot be based simply on a negative agenda.
  • Shared concerns about China provide the U.S.-India partnership a much-needed impetus to overcome the awkward efforts for deeper collaboration that have characterised the past few decades.

Encouraging sign

  • There has been progress. The U.S. Special Presidential Envoy for Climate, John Kerry, has visited India twice already, and India and the U.S. are collaborating under the Climate and Clean Energy Agenda Partnership.
  • In parallel, there are hopeful signs that they are now prioritising the bilateral trade relationship by rechartering the Trade Policy Forum.
  • Both countries are also taking leading roles, articulating their climate concerns and commitments.
  • India just announced a net zero goal for 2070 and it has called for western countries to commit to negative emissions targets.
  • India’s rhetoric of climate justice is likely to be received poorly by U.S. negotiators, particularly if it aligns with China’s messaging and obstructs efforts to reach concrete results.
  • Likewise, the failure of the U.S. and India to articulate a shared vision for a comprehensive trade relationship raises doubts about how serious they are when each spends more time and effort negotiating with other trading partners.
  • Protectionist tendencies infect the politics of both countries these days, and, with a contentious U.S. mid-term election a year away, the political window for achieving problem-solving outcomes and setting a vision on trade for the future is closing fast.

Interlinks between Climate and trade

  • Climate and trade are interrelated in many ways, from commercial dissemination of cutting-edge carbon mitigation and adaptation products and technologies to the carbon emissions that come with the transport of goods and humans from one country to another.
  • India and the U.S., can coordinate policies to incentivise sharing of climate-related technologies and align approaches for reducing emissions associated with trade, the climate-trade inter-relationship can be a net positive one.
  • To deal climate and trade approaches better, both countries should start with a resolution of their disputes in the World Trade Organization (WTO) on solar panels.
  • As they have dithered in pursuing cases in the WTO and settling them, China has effectively captured the global market, leaving each dependent on a source they view as a threat.
  • The two countries could also chart a path that allows trade to flow for transitional energy sources, such as fuel ethanol.
  • India currently bans imports of fuel ethanol even as it seeks to ramp up its own ethanol blend mandates and build a domestic sector that can join the U.S. and Brazil in exporting to the world.
  • Left unaddressed, this will be another missed opportunity for the two economies to work to mutual benefit.
  • Shared strategic interests will be undermined if India and the U.S. cannot jointly map coordinated policies on climate and trade.
  • The most immediate threat could be the possibility of new climate and trade tensions were India to insist that technology is transferred in ways that undermine incentives for innovation in both countries or if the U.S. decides that imports from India be subject to increased tariffs in the form of carbon border adjustment mechanisms or “CBAMs”.
  • Climate-inspired trade tensions that might even lead to new trade wars can hardly bolster(to improve something or make it stronger) the strategic partnership.
  • Diplomats on both sides have worked hard over the past few years to paper over such differences so that they do not distract from the efforts to lay the foundations for a closer strategic partnership, but the fissures have not disappeared and ignoring them will not make them go away.
  • Concerted action on both the climate and trade fronts is mutually beneficial and will lend additional strength to the foundation of a true partnership for the coming century.

Source : The Hindu