The American leadership of the geo-economic sphere was missing in these last few years as the US started to look inward and build a protectionist narrative about trade. The bastion of free trade and liberalisation called for quite conservative arguments surrounding the economy. The Trump years of America-First policy entailed trade upheavals between the US and its allies and also served as a perfect opportunity for China to posture itself as a free-trade beacon in the retreating liberal world order. China’s free trade is marred with severe state-controlled, financed and labour exploitation along with deceptive policies to flood foreign markets with cheap goods and buy foreign elites with cheaper capital. Hence the US reaffirming its stance on free global trade was much needed, especially for developing nations like ours. India’s stance on global trade too has been flip-flopping from Free Trade Agreements to entire re-negotiated bilateral trade arrangements and certain reluctance to join trade blocs. In this scenario, the complete disruptions initially by Covid and then with the Russia-Ukrainian war of supply chains have brought trade policies centre stage for all nations. The intertwined world now cannot dissociate itself from the ramifications of foreign events and hence leadership in free trade is needed. China certainly cannot be handed this leadership as their free trade is never actually free.
So my proposal hinges on combined bilateral leadership of US-India to navigate the globe on trade matters including supply chain resilience. Many will scoff at my suggestion of India leading a free trade order rather than any European or South-East Asian nation that has been practising free trade for decades. India also has shied away from being a participant in major Free Trade Agreements like the Regional Comprehensive Economic Partnership, but so has the US which bowed away from the Trans-Pacific Partnership. India’s major concern with RCEP was that China being the dominant partner in this trade bloc, would flood Indian markets with not that ethical trade practices. Therefore both these large economies want FTAs but on certain conditions that will be mutually beneficial to their domestic consumers and producers.
Thus with the US proposal for Indo-Pacific Economic Framework, it has rather led to the setting of standards on four pillars of an economic partnership than market increase or tariff reductions which are norms of FTAs. This gauges the mood of the US, which wants to first set certain principles to be followed for trade partnerships and then synchronise economies. This bodes well for India as it too wants trade agreements to be guided by certain norms and also be sensitive about domestic concerns. The Indo-US leadership will hence provide a different paradigm to free trade. Rather than a single-minded focus on market access and reduction in tariffs this new paradigm might provide synchronisation of economies with respect to certain objectives. In the case of both India and the US, their economies share strong digitisation and offerings of digital services, both also focusing strongly on new-age energy generation and storage. They have also reiterated infrastructure development but through sustainable and viable financing so that recipients avoid the debt trap- a direct attack on Chinese projects that have burdened many.
Thus I see Indo-US similarities in economic objectives to be an enabler for their leadership of free trade. Free trade has to connote different meanings now and hence a paradigm that is based on ethical trading principles, mutually beneficial and also on parameters of transformational nature to a low-carbon future must be understood within free trade ambit. I also strongly argue that the Indian government must make this new free trade agreement with many countries otherwise we are losing opportunities because even if nations want to shift supply chains from China or even commodities super-power Russia, they want certain forms of agreements from India. India has to guarantee consistency in trade policies and not make abrupt changes like it has done now with regard to wheat, sugar, and steel export. This dissuades nations and damages our reliability. US financial heft with Indian personnel strength can as well work wonders in third-world countries which are now dependent on China for both financings and building their future.
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