Millennium Post

For a transformative partnership

There would be added momentum for a historic partnership when President Obama welcomes Prime Minister Modi in Washington later this year.

The Indo-US Strategic and Economic Dialogue this July weekend has an ambitious agenda, as outlined by Mr Kerry on the eve of his visit, not only to boost bilateral trade toward a 500-billion dollar mark, develop cleaner energy and drive South Asia’s connectivity but also to deepen security partnership in Asia-Pacific region and beyond. US hopes for India 2020 are set out in tune with business-minded policies and other new ideas voiced by Mr Modi in his election campaign and as Prime Minister.

Indo-US economic cooperation had not taken off in volume and depth over the last decade, as much as envisaged by businessmen and government leaders on both sides, and lately serious differences in approach had also emerged. Expansion of trade between the two nations though impressive is far below potential and contentious issues have held up a bilateral investment treaty, resumption of US-India Trade Policy Forum and technology transfer in high-end areas.

India has so far been considered to be less open to investment capital flows and US business wants greater space for private initiative, limiting of subsidies that they consider as stifling competition, and guarantee of strong intellectual property rights. Mr Kerry takes note of the Modi Government reform plans with more openings for FDI, and the Prime Minister’s references to aspirations of the youngest population and the need for high-skill trade.

US side would like to contribute to creating a more competitive work-force with expansion of educational ties, especially in technical and vocational education, according to Mr Kerry. Speaking on the eve of his visit to India, at the Centre for American Progress, on July 28, Mr Kerry said US business was eager to be a catalyst in India’s economic revitalisation in key sectors such as high-end manufacture, infrastructure, health-care and IT, all of them vital to ‘leap-frogging stages of development’.

But he is coming also at the peak of disenchantment that India has scored with its determination to defy almost the rest of the world on ratification to the Trade Facilitation Agreement under WTO auspices by the deadline set, July 31, unless simultaneously guarantees are held out for safeguarding India’s subsidized food security system on a durable basis.

The Bali Ministerial package of last December on the long-awaited Trade Facilitation deal came as the first major breakthrough in the deadlocked Doha Round for 13 years, where negotiations on key areas of agriculture, industrial goods, services, and disputes settlement had till now proved infructuous.

The Bali decision triggered expectations for reviving the Doha Round vigorously and bringing it to a successful conclusion by the end of 2014.

The WTO General Council, the highest decision-making body and equivalent to ministerial, met on July 24-25 but the meeting was kept in suspense for lack of consensus-building among the 160-member countries. There was uncertainty still about India’s stand and whether the Protocol of Amendment relating to TFA could be signed by the July 31 deadline.

The General Council may be reconvened to further discuss the Trade Facilitation Agreement on or before 31 July depending on progress of ongoing consultations by WTO Director-General Roberto Azevêdo with ambassadors in Geneva of all G-20 countries, G-33 and LDCs.

Most developing countries as well as China and Brazil do not toe the India line and India is also urged to strike a compromise formula.

Trade being the key issue for all countries including India, the latter’s stand on a parallel agreement on food security – though the Bali package had provided a peace clause valid for four years for India’s food security system – has evoked strong criticism from US, EU and other developed nations. The latest developments have posed a challenge to the multilateral trading system.

Mr Kerry, in his address in Washington, said while the United States worked with trading partners to advance trade and investment liberalisation, India has to make its decision about ‘where it fits in the global trading system.  India’s willingness to support rule-based trading order and fulfill its obligations will help greater investment from the United States’ and from other countries.

The Modi vision of ‘Sabke Saath Sabka Vikas’ has the support of USA and the two countries can together work in new directions to make it the defining relationship in the twenty-first century, as President Obama described, Mr Kerry noted. 

India was assuming greater responsibility for regional and global security among South Asian nations and in international organisations, he said, India should be a global leader. He recalled President Obama’s clear support for a reformed UN Security Council which includes India as a permanent member.   

The India-US dialogue will be wide-ranging and key areas will cover climate change and Indo-US agreement on civil nuclear cooperation. US wants to build on the agreement so that American companies can build plants and provide clean power to millions in India. Mr Kerry has also underlined Mr Modi’s plan for total electrification by 2019 and said with fewer limits on foreign technology and investment, USA could help to make clean power more cost-effective and more accessible. IPA

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