India-US strategic relationship: trade ties can push multilateralism: Experts

Economic Times, June 21, 2023

Leadership by India and the United States will be indispensable for the success of the multilateral trading system. “We need to find ways for the two countries to collaborate and together demonstrate their shared commitment to trade multilateralism”, said Pradeep S. Mehta, Secretary General, CUTS International.

“Prime Minister Narendra Modi is a strong votary of multilateralism and supports the World Trade Organisation as an important player in the system”, said Mehta.

He was moderating a webinar organised by CUTS to discuss the prospects for India and the US to collaborate on revitalising the multilateral trading system with the WTO at its centre. The programme saw a number of distinguished panellists sharing their thoughts on the subject.

Rajesh Agrawal, Additional Secretary, Department of Commerce, making remarks in his personal capacity, observed that a rules-based multilateral trading system is a natural corollary of India’s Vasudhaiva Kutumbakam (‘the world is one family’) philosophy. As a global public good, the multilateral trading system has room to accommodate the interests of all countries.

He pointed out that India has always been a strong votary of special and differential treatment (S&DT), and that differential levels of development of different countries have to be taken into account within the multilateral rules.

While noting that trade policy and geopolitics go hand in hand, Agarwal also recognised the substantial momentum generated by the WTO’s 12th Ministerial Conference last year, where countries including India and the US came together to drive tangible outcomes.

Mark Linscott, Senior Advisor with the Asia Group and former Assistant US trade representative stated that while collaboration between India and the US Today’s Paper on WTO and multilateral trade issues had been limited, highlights of positive engagement included the successful conclusion in 2013 of the Trade Facilitation Agreement and the Bali decision on public stockholding for food security in developing countries, both cases where India and the US led from the front.

Although observing that neither side had much of an appetite for trade multilateralism for now, he suggested that the bilateral Trade Policy Forum (TPF) mechanism can introduce a dedicated work programme which can advance shared interests on WTO issues.

Linscott recognised that while it was challenging, joint efforts by India and the US to collaborate on WTO issues could be a game-changer in addressing systemic concerns of trade multilateralism.
Amita Batra, Professor of Economics, Jawaharlal Nehru University sounded a cautionary note and questioned the premise of India and the US coming together to promote trade multilateralism.

She reminded that this was not the first time the multilateral system was being undermined, but today it was clearly being challenged by various selfserving actions of the US such as unilateralism and exclusionary regionalism.
While emphasising that the continuing relevance of the WTO has to be preserved, Batra doubted the extent of convergence that could be achieved between the two sides’ approaches to multilateralism and WTO issues.
She observed that arriving at a shared understanding of new areas, such as the role of trade in climate change and sustainability, was crucial for multilateralism to revive itself.

Rajya Vardhan Kanoria, CMD, Kanoria Chemicals and Industries Ltd. noted that the actions undertaken by both India and the US were often very different from their statements on multilateralism.

“A prime example was the recent trend seeking reshoring of manufacturing, which was evident in the policy measures undertaken by both countries”.

Kanoria recognised the potential of the growing strategic relationship between India and the US as an important driving force in the coming years, with potential positive spillovers fortrade multilateralism.

He also said that it was ill-advised to believe that multilateralism could be steered only by market economies, given China’s predominant position in the global economy and geopolitics today.

Veena Jha, CEO, IKHDVAJ Advisers, pointed out that restoration of the twotiered WTO dispute settlement system with a functional Appellate Body was a priority for India, which the US was effectively single-handedly blocking.

Similarly, maintaining the integrity of consensus-based decision making and understanding the full range of impacts of newer trade-related obligations on developing countries are front and centre for India, but which the US contests. She also observed that there was significant potential to discuss some of these issues within the framework of the bilateral TPF.

Pritam Banerjee, Head, Centre for WTO Studies observed that the international order as it stands today is greatly affected by the technological transition that has been underway since the last decade. Given the range of priorities of different countries, no perfect multilateral system can exist.
He pointed to agriculture, sanitary and phytosanitary (SPS) and technical barriers to trade (TBT) measures, and digital trade as some of the areas of potential bilateral cooperation which could lead to multilateral solutions in the longer-term.
Banerjee cautioned against moving too fast on international regulation of the digital economy, given the varying levels of development of countries and without first adequately addressing these issues on the domestic front.
He also suggested that India and the US could collaborate on defining the contours of industrial policy, recognising that these policy tools were here to stay.

R V Anuradha, Partner, Clarus Law Associates recounted that the WTO system, although an imperfect bargain, remains unique given the enforceability of its rules.
She noted that the world has come too far ahead in terms of economic interdependence, and there is somewhere a realisation of the need for minimum cooperation between countries in order to maintain the global economic system.
On the WTO dispute settlement system, she observed that no alternative could match the confidence that WTO members had reposed in the appellate mechanism in the form of the Appellate Body.

She highlighted that even in those cases where countries, such as India and the US, were deciding to settle their trade disputes out of court, the framework of the dispute settlement system encouraged such mutually agreed solutions, thereby highlighting its centrality.

Anuradha also emphasised the importance of participating in the plurilateral negotiations on several issues underway at the WTO, in order to effectively shape the evolution of rules on new and emerging areas.
Pranav Kumar, Vice-President, Reliance Industries Ltd. noted that translating the political messaging of WTO reform into ground realities has always remained an enduring challenge.

While there remains limited convergence between India and the US on collaboration towards WTO reform, growing bilateral convergences in other areas may contribute to meaningful action on this front further down the line.
He also observed that revitalising multilateralism in all its forms, not just trade multilateralism, was a stated priority for India.

Mehta added that even though the meeting of Modi with Biden in Washington DC may not discuss this issue, it will certainly come up at the G20 summit in September in Delhi when both leaders meet and that WTO reforms will be a part of the summit declaration.

Prabhash Ranjan, Professor of Law, South Asian University, also struck a cautionary note and opined that the US was not significantly interested in trade multilateralism at this point. As an example, he pointed out that while the US had flagged several deficiencies with the existing dispute settlement system, it did not engage in constructive discussions nor offer any solutions on how to address them.

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