A Thumbs Down To Unilateralism

jatin
By jatin July 1, 2019 14:48

Biswajit Dhar, Professor, Jawaharlal Nehru University discuss the trade war. This article is for a thumbs down to unilateralism.

Unilateralism: Unilateralism is any doctrine or agenda that supports one-sided action. Such action may be in disregard for other parties, or as an expression of a commitment toward a direction which other parties may find disagreeable.

Important Analysis

  • Economic relations between India and the United States are on a knife-edge after the U.S. took a series of unilateral actions against India’s exports, that began in 2018, followed by India’s recently announced retaliatory move of increasing tariffs on 28 products imported from its largest trade partner.
    • As a result of these developments, India has become the Trump administration’s most significant target after China.

Donald Trump – “India has put very high tariffs against the United States”.

Mike Pompeo- “The United States has been clear we seek greater market access and the removal of trade barriers in our economic relationship.”

Background

Some of the major instances where the U.S. has questioned India’s trade and other related economic policies

  • Office of the United States Trade Representative (USTR) and the United States International Trade Commission (USITC) — have “investigated” India’s trade policies, the conclusions of which have been used by the administration to demand changes in policies that would benefit American businesses.
    • These investigations were carried out at the request of the U.S. House Committee on Ways and Means and the U.S. Senate Committee on Finance

“under section 332(g) of the Tariff Act of 1930 (19 U.S.C. 1332(g)) regarding Indian industrial policies that discriminate against U.S. imports and investment for the sake of supporting Indian domestic industries, and the effect that those barriers have on the U.S. economy and U.S. jobs”.

  • The latest demands stem from two extensive USITC investigations which were conducted between 2013 and 2015 on India’s trade, investment, and industrial policies.
    • The first of these investigations, the report of which was submitted towards the end of 2014 following which a second request was made by the two Congressional Committees to investigate the performance of the government in its first year of Modi government in office. This report was submitted in September 2015.
      • Although in 2014, the USITC seemed to support the direction of the Modi government’s economic policies in its first few months, in the second report, which covered the government’s first year in office, the familiar tone of disagreement over India’s trade and investment policies appeared once again.

Issues

The main message that was conveyed by these investigations was that American businesses strong disapproved several of India’s key policies on trade and investment and that these policies had to be amended.

  1. Issue of Unilateralism:
  • All of India’s trade-related policies (which include intellectual property rights that were investigated and questioned in the two USITC reports were done under the cover of the U.S.’s domestic laws. This is tantamount to unilateralism, the response to which should be an unequivocal “no” in this age of multilateralism, where differences on policy issues between sovereign countries must be resolved in the appropriate multilateral forums.
  • The possibilities of a stronger power using unilateral means should be eliminated. It is in this spirit that the General Agreement on Tariffs and Trade (GATT) was established as an integral part of the post-war global economic governance. GATT was replaced by the World Trade Organization (WTO) in 1995.
  1. Against the WTO principle:
  • The areas that were investigated by the USITC during the two investigations were also those that are covered by the WTO. Therefore, propriety and global trade rules demanded that the concerns of American businesses about India’s policies had to be addressed within the WTO through consultations among the members
  • The main purpose of the GATT/WTO is to provide a forum for the resolution of disputes by following multilaterally agreed rules. The global community agrees that this would be the best way of preventing countries from getting into trade wars, which had pushed the global economy into the depression of the 1930s.
  • The only country disagreeing with this position is the U.S.; it seems intent on pushing its trade partners into trade wars.

Reasons for the U.S. is not approaching the WTO to challenge India’s trade and investment policies

  • India is acting as per the agreed rules to WTO policies
    • India’s high tariffs which have left Mr. Trump greatly perturbed. These tariffs were agreed to in the Uruguay Round negotiations in consultation with all members of the organization.
  1. The flawed procedure of conducting the investigations:
  • S. government agencies have been not only acting as the judge and the jury but also actively engaged in getting the findings of the investigations implemented.

What is at the core

  • The India-U.S. discord over trade stems from a deep-seated desire of U.S. businesses to have a bigger footprint in the Indian economy, and to achieve this goal, the administration is stepping beyond legitimate means.

Way Ahead

Under these circumstances, the Government of India would have a focus on two fronts:

  • To remain engaged with its largest trade partner and
  • To engage actively with the global community to make the U.S. understand the imperatives of a rules-based trading system.

Also read:

Maratha Reservation Verdict By High Court: An Analysis

The Legal Provisions for Women

Source: https://www.thehindu.com/opinion/lead/a-thumbs-down-to-unilateralism/article28236197.ece

jatin
By jatin July 1, 2019 14:48