With a trade deal unlikely, New Delhi must calibrate the costs and benefits of the U.S. President’s political tour.
By Harsh V. Pant and Kashish Parpiani
During U.S. President Donald Trump’s maiden visit to India on February 24-25, the U.S. and India were initially expected to sign a limited trade deal. Over the past three years, U.S.-India trade tensions have been escalating despite America’s trade deficit with India beginning to narrow and it being less than a tenth of the U.S.’s trade deficit with China.
As trade negotiations stalled, the Trump administration levied steel and aluminium tariffs on India, revoked India’s benefits under the Generalised System of Preferences (GSP) programme, briefly contemplated limiting H1-B visas quota for Indians to 15% due to divergences on e-commerce policy, and raised the possibility of a Section 301 investigation into India’s tariff/non-tariff barriers to coerce India to eliminate practices that impede U.S. exports.
India has reportedly finalised a defence package worth $3.5-billion for 24 MH-60R Seahawk maritime multi-role helicopters and six AH-64E Apache attack helicopters. In exchange, the expectation for India was the restoration of benefits under the GSP programme — under which, Indian exports worth $5.7-billion to the U.S. enjoyed duty-free status (2017).
However, a day after Mr. Trump’s visit dates were announced, the United States Trade Representative (USTR) released a federal notice on eliminating a host of countries from its methodology for countervailing duty (CVD) investigations. India was removed from the list of developing countries that “are exempt from investigations into whether they harm American industry with unfairly subsidised exports”. With this move, the U.S. essentially closed the door on reinstating India’s benefits under the GSP, a preferential arrangement meant only for developing countries.
The timing of this move suggests Mr. Trump’s motivations pertaining to his India visit have little to do with tempering bilateral frictions. Instead, political motivations seem to be writ large. New Delhi will have to carefully calibrate the costs and benefits of Mr. Trump’s move.
Earlier this month, the U.S. Senate voted to acquit Trump on two articles of impeachment — abuse of power and obstruction of Congress. It was an expected outcome, as polarisation in American politics has accentuated with the U.S. Congress being divided into two partisan strongholds — the Democrats are in-charge of the House of Representatives and Republicans hold the Senate. However, given the fact that the impeachment proceedings prolonged well into an election year, the American electorate has not heard the last of it just yet. Mr. Trump was alleged to have sought a quid pro quo over U.S. military aid to Ukraine, in exchange for Ukraine’s assistance in acquiring dirt on former U.S. Vice-President and now Democratic presidential candidate Joe Biden. In the upcoming elections, the allegation is expected to feature prominently in the Democrats’ attempt to deride the Trump administration’s values-bereft, transactional conduct of U.S. foreign policy. Concurrently, Mr. Trump has begun to hail his Senate acquittal as a matter of total exoneration. Moreover, in discrediting Democrats’ criticism on Mr. Trump’s conduct of American international relations in general, his re-election campaign is sure to outline the supposed gains of the “America First” world view.
It is here that a potential trade deal with “tariff king” India would be listed among other renewed partial/complete trade deals such as the United States–Mexico–Canada Agreement (USMCA); renegotiated trade terms with South Korea, and Japan; and the “Phase One” deal with China, as instances of vindication. For instance, just days before the Democrats’ caucus in Iowa, Mr. Trump held a rally in Des Moines, Iowa. Citing his renewed trade deals and the Democrats’ opposition to his approach of exacting them, Mr. Trump said, “We’re going to win the great state of Iowa and it’s going to be a historic landslide.” He added, “And if we don’t win, your farms are going to hell.”
Moreover, with the India visit, the U.S. President has expressed his exhilaration over “millions and millions of people” that are expected to attend the “Namaste, Trump” event in Ahmedabad. With its pomp and ceremony, it is expected to be the Indian iteration of the “Howdy, Modi!” rally held late last year in Houston. Evidently, the same was an attempt to court the 270,000-strong Indian American community in the emerging battleground state of Texas. Similarly, the rally in Gujarat also holds relevance in terms of Mr. Trump’s political arithmetic for 2020. In visiting Prime Minister Narendra Modi’s home turf, one can see the American President’s attempt to mobilise the Indian American community by showcasing his proximity to Mr. Modi’s India.
Mr. Trump’s political motivations notwithstanding, it would be prudent for India to not let the visit reflect as a partisan endorsement for his re-election. In recent years, American political polarisation has begun to erode the once-iron clad bipartisan consensus on U.S. foreign policy. In case of Congressional bipartisanship on India, that schism has emerged also due to the apparent partisan fervour of the “Howdy, Modi!” rally and House Democrats’ rising apprehensions on the communications lockdown in Kashmir.
Challenges for India could worsen in the coming years. If re-elected, Mr. Trump will possibly double-down on his will to seek renewed trade deals. At which point, remainder issues under U.S.-India trade ties could witness heightened tensions. Or, Congressional Democrats’ apprehensions may assume heightened vigour. Even in their worst-case scenario in 2020 of not winning back the White House, they are expected to, at the very least, chip away at the Republicans’ already slim majority in the Senate.
Moreover, working towards reinstating a certain sense of Indian neutrality on American polarisation would also make sense from the standpoint of the Senate entering an era of minimal majorities. The Republicans’ slim majority of 53-47, has opened the door to defections by legislators who do not always identify with the Trump agenda or do not mind crossing the aisle on initiatives that constrain Mr. Trump’s foreign policy decision-making.
Thus, with Mr. Trump’s visit, New Delhi must ensure its projection as a net gain for the bilateral relationship at-large — and not merely an extension of the U.S. President’s re-election campaign.
This article originally appeared in The Hindu.