Trump’s latest target

The US President has walked the talk and removed India  from the preferential trade list. The ball is now in our court

Union Commerce Minister Piyush Goyal could not have expected that soon after the smiles and photo-opportunities ended, he would be thrust into the deep end of India’s trade problems, with United States (US) President Donald Trump keeping his promise to remove India from the General System of Preferences (GSP). This programme allowed Indian exporters access to US markets at zero duties to the tune of $5.6 billion every year. While Trump’s trade wars across the world have focussed primarily on China and the European Union, India has never been far away from his gaze. He had warned that the GSP would be lifted back in March and the US Commerce Secretary even visited India last month in the midst of the elections. The US might have been persuaded to delay any punitive action until the new government was sworn in but that it was single-minded and unwavering was evident from its decision taken hours after Goyal barely took over from Suresh Prabhu at Udyog Bhavan. Goyal will have to use his experience of working in the US as an investment banker to good use now. Trump’s entire economic agenda has been based around removing what he considers ‘unfair’ trade practices by other nations on American imports. This has completely upended the global trade applecart and it is ironic that a President from America’s pro-Capitalist Republican Party has almost torn globalisation asunder. Negotiations with the US will not be easy, it wants more access to the Indian market for its agriculturalists. The US has also complained about sourcing rules for e-commerce firms like Flipkart, now owned by American retail giant Walmart. American financial services firms such as MasterCard have complained vociferously against India’s data localisation laws.

At the same time, India has been a rich hunting ground for American technology and services firms such as Google, Facebook and Uber. And US foreign policy advisors see India as a bulwark against China’s increasing economic and military might, with India being an essential part of the ‘Quad’, a nebulous alliance between Australia, India, Japan and the US. It is essential for the US to realise the strategic importance of India in the coming decades, particularly as the trade wars with China are effectively the first shots in the conflict between the two nations. At the same time, India has to balance some of the US’ more legitimate demands for lower duties and greater access. Goyal, therefore, has a difficult time on his hands, balancing flagship programmes like ‘Make in India’ with Trump’s ego. But he has no options.

The Pioneer