Topic 1: Bracing for Trump
Introduction: The US presidential election will be watched very keenly by all its friends and foes. The prospectus of winning Donald Trump will shake up the established foreign policies of many nations. A recent headline in Nikkei Asia, a leading English-language publication from Japan, said America’s allies in the Indo-Pacific “tremble at the prospect of Trump’s return”.
Concerns regarding Trump or Trump led opposition in the US
- As the chances of Donald Trump winning the grudge match against President Joe Biden brighten, the apprehensions of US allies in Europe and Asia are getting darker.
- Even if Trump does not win, his Republican Party’s growing opposition to foreign commitments and a deepening sense of “America First” promise to produce major changes in Eurasian geopolitics.
- On the face of it, this does not look too threatening to India.
- After all, India is not an “ally” of the US and does not depend on its military forces for its security.
- A closer look, however, points to more complex consequences of Trump’s “America First” policies.
- Any American military retrenchment from Eurasia will dramatically alter the balance of power in this region and produce outcomes that are patently unfavourable to India.
Eurasia without an American security guarantee
- Eurasia without America will be a dream come true for those strategists in Moscow and Beijing who fancy their chances of building a new regional order dominated by them.
- It’s a nightmare for the neighbours of Russia and China.
- Although Moscow and Beijing have no love for Trump, they relish the prospect of exploiting the divisions that Trump might sharpen among the US and its allies.
The unipolar Asia and India
- Although India rarely debates the consequences of a Europe without America, it is acutely conscious of the dangers of a unipolar Asia dominated by China.
- It is possible to see that without American presence, Asia could easily slip into the Chinese orbit.
- As a maritime power, Delhi’s natural preference is for a multipolar order in Eurasia that is not dominated by one power or an axis of continental powers.
- Yet, Delhi must prepare for major changes in Eurasia amidst the current volatility in US domestic politics and its inevitable global impact.
Is apprehension against Trump justified?
- It was during his presidency that the US National Security Strategy moved Washington away from wasting its energies battling insurgencies in the badlands of the Greater Middle East to dealing with the challenges presented by an increasingly assertive Russia and China.
- For all the accusations that Trump was putty in the hands of the Russian leader Vladimir Putin, his administration ramped up the pressures against Moscow.
- More consequentially, the Trump Administration began the bold reversal of four decades of Washington’s strategy to befriend Beijing and expand the US economic interdependence with China.
- Trump imposed new tariffs on China, began an effort to reduce economic exposure to Beijing, and revived the Quadrilateral Forum as part of a new Indo-Pacific strategy to balance China.
- Biden has built on the decisive Asian strategy articulated by Trump.
What makes allies worried regarding Trump’s return?
1. Trump’s unpredictable and impulsive foreign policy
- Many chancelleries around the world believe that the “adults in the room” and the American “deep state” restrained Trump from pursuing his convictions on allies as free riders during his presidency.
- In both Europe and Asia, Trump came close to taking radical steps against allies, such as withdrawing US troops, but held back.
- This time, America’s allies worry that Trump will be less restrained.
- They also fear that Trump’s impulsive character and transnational approach will be more on display and do irreparable damage to long-standing US alliances.
2. Trump’s insistence on payment for the security umbrella
- Despite the widespread Trump-bashing in the US and allied foreign policy establishments, the former president is making an important political point.
- US allies can’t expect the American taxpayer to spend blood and treasure forever defending their partners who are unwilling to do their bit.
- The traditional internationalists — both liberal and conservative — believe it is a price worth paying to sustain American leadership of the international system and the benefits that accrue from it.
- For Trump and a significant section of the Republican Party, the entrenched “globalism” of the US foreign policy elite is an important part of the problem.
- It is a view with some resonance on the left of the US political spectrum that equates American globalism with a disastrous penchant for empire.
3. Trump ended the generosity of opening US markets to allies
- Trump rejects the long-standing assumption in the American establishment that generous non-reciprocal access to the US market should be granted in return for geopolitical favours from allies.
- This seemed a good deal for the US when it was an economic colossus towering over the ruins of post-war Eurasia, and it needed to win strong military allies in the war against global communism.
- Trump and the anti-globalist tribe argue that the American people and its economy have paid a huge price — in terms of lost manufacturing jobs — for this grand bargain.
- They are no longer willing to trade the US market for geopolitical gains.
- In his first term, Trump not only targeted China with tariffs but also allies in Europe and Asia.
- Trump is now threatening to impose an across-the-board tariff of 10 per cent on all imports into the US.
- He also promises to slap tariffs up to 60 per cent on imports from China.
Why these developments should concern India?
On the security front
- India’s outlook is positive. The US search for capable partners who are willing to contribute to regional security in Eurasia fits nicely with Delhi’s own great power ambitions.
- The quicker India moves on building its military capabilities and the greater its willingness to deploy it for collective defence with its partners, the faster its rise in the Eurasian security hierarchy will be.
On the economic front
- Though, Delhi has a challenge. That India is the “tariff king” is stuck in Trump’s head, and he frequently lashed out at India’s protectionism.
- India’s efforts to negotiate a trade agreement with the Trump Administration did not succeed.
- Since Trump left office, the US has become a more important economic partner for India; trade and technology ties with America are also the most promising.
- Given the high commercial stakes in this relationship, Delhi will need to think creatively about a new framework for trade cooperation with Washington.
Conclusion: A possible Donald Trump presidency is worrying the US's allies. New Delhi is well-poised on the security front but may need a new framework for economic and trade cooperation.
Topic 2 : Trade gains
Introduction: Over the past few years, the Narendra Modi government has been actively pursuing trade agreements. The signing of a trade agreement with the four-nation European Free Trade Association (EFTA) shows the pursuit of more open trade with the world.
India’s recent trade talks and signing of trade agreements
- It has signed an economic cooperation and trade agreement with Australia and a comprehensive economic partnership agreement with the UAE.
- Talks are also on with the UK and the EU.
- And on Sunday, after 16 years of negotiation, the government has signed another trade agreement with the four-nation European Free Trade Association (EFTA), comprising Iceland, Liechtenstein, Norway, and Switzerland.
- These are welcome developments.
- They signal greater openness and desire to push through trade agreements and a change from the times when negotiations would be abandoned midway.
Benefits from trade agreement with EFTA
- As per the newly signed agreement, the EFTA states shall aim to increase FDI into India by $50 billion within 10 years, and another $50 billion in the five years thereafter.
- This could facilitate the generation of one million direct jobs in the country.
- To provide some perspective — EFTA investment stood at $10.7 billion in 2022.
- Switzerland is India’s largest trading partner in this bloc of nations, followed by Norway.
- In fact, India has a trade deficit with Switzerland, largely due to gold imports.
How treaty with EFTA will impact trade between both parties?
- After the treaty comes into effect, the EFTA nations will see a reduction in tariffs.
- As reported in Indian Express, the agreement will result in the “elimination of duties on most industrial goods exported to India”, such as pharmaceutical products, machinery, watches, fertilisers, medicine, chemical products and others.
- India is offering “82.7 per cent of its tariff lines which cover 95.3 per cent” of the grouping’s exports.
- However, most agricultural items have reportedly been kept outside the purview of this deal.
- EFTA’s “market access offer covers 100 per cent of non-agri products”.
- The services sector also forms a vital part of this trade agreement.
- The agreement would help stimulate services exports in areas such as information technology and facilitate the movement of key skilled personnel.
Way forward for India
- The Indian government had set an ambitious target of $2 trillion in exports of goods and services by 2030.
- Achieving this will require policy action on a range of issues — from lowering tariffs to entering into deeper, more expansive free trade agreements while safeguarding the country’s interests.
- It also calls for ensuring that measures are taken so that the benefits from these trade agreements are fully reaped.
- At this critical juncture in the country’s development trajectory, it must push ahead.
Conclusion: The pact signals greater openness, and a willingness to enter into broader and deeper agreements. This treaty will become a benchmark for other nations to follow while signing trade deals with India.