Indian Prime Minister Narendra Modi could not have been more clear in his speech on August 15, 2022, 75 years after India declared independence from the British Empire. century and is already emerging as a role model for other countries, large and small, around the world.
Investors and foreign economic powers should heed Modi’s ambition to ensure India is a developed country by 2047, its 100th anniversary. What India will surely produce in the next quarter century.
India has been busy at the forefront of trade recently, announcing a flurry of new Free Trade Agreements (FTAs). First, in February 2022, we signed an FTA with the United Arab Emirates (UAE). The United Arab Emirates (UAE) is a relatively small country in world trade but is India’s main trading partner. India has since signed an ‘interim’ FTA with Australia, ending years of stalled negotiations. India is now igniting FTA negotiations with the European Union (EU), the United Kingdom (UK), and Canada, seeking new negotiations with the Gulf Cooperation Council (GCC) and Bangladesh, and pursuing an existing partnership with Japan. are seeking an upgrade to their FTAs. South Korea, Association of Southeast Asian Nations (ASEAN).
The United States’ absence from this frenzy of negotiating action by India is striking.
Indian trade officials are unabashed in communicating their interest in an FTA with the United States. The benefits cannot be overstated. Given the size of the two economies, the importance of existing India-US trade and investment, and the potential to significantly expand bilateral economic activity, the US-India FTA would be larger than all other India FTAs combined. will be But the Biden administration is prepared to negotiate an FTA even after being pressured by Indo-Pacific allies to rejoin the Trans-Pacific Partnership (TPP), now the Comprehensive and Progressive His TPP (CPTPP). similarly clarifies that it is not possible.
There are signs that the United States and India understand the importance of raising the bar for future performance in their generally stagnant economic relationship, even as their strategic partnership blossoms. In November 2021, U.S. Trade Representative Katherine Tai and Indian Trade Minister Piyush Goyal successfully reconvened the Bilateral Trade Policy Forum (TPF), the primary forum for discussing trade between the two countries. I was. The two countries rejoined the TPF ministerial meeting in Washington on January 11 to set the bilateral trade agenda for next year.
The Biden administration has also called on India to join the Indo-Pacific Economic Framework (IPEF) initiative, but India has refused to join the IPEF’s trade pillar. Hard-earned experience suggests that multilateral negotiations are not the optimal approach for building trust between the United States and India on trade, and pessimism was again confirmed in 2012.th At the World Trade Organization (WTO) ministerial meeting in June 2022, the two clashed over a long list of issues.
The bottom line is that while there has been a lot of engagement between the two countries on trade over the last few years, little shows all the hard work. Both sides have concluded that further investment in deepening and expanding India-U.S. trade ties is unwarranted, and fear disappointment could lead to a new cycle of cynicism.
Ironically, given this admittedly pessimistic assessment of the status quo, the present time may be ideal for charting a path forward for the Biden administration toward future FTA negotiations with India.
Unlike other forums of bilateral, regional and multilateral engagement, FTA negotiations present a unique dynamic that affects both sides. Indeed, the Biden administration may seize the historic opportunity to put trade with India at the top of the international economic agenda before it is too late. While the United States sits on the sidelines, India has developed sophisticated trade ties with mutual partners and trades effectively with its adversary Russia. Bold ideas are needed now to change the trajectory of the US-India trade relationship. Otherwise, you may look back on this wasted moment with deep regret for years to come.
Small and quick victories matter. To avoid the failures of the past, his vision for future FTAs must be front and center. That way, bureaucratic or political resistance can be overcome more easily. The step-by-step plan we advocate can build levels of confidence and achievement along the way, one that will help the Biden administration emerge from its anti-FTA stagnation and help President Biden and Prime Minister Modi make mutual commitments to his FTA negotiations. It may start by announcing the hope of
In fact, 2023 is set to advance the new India-US trade agenda, especially to focus on issues of critical importance to both sides, such as digital trade, environmental sustainability and a more equitable distribution of the economic benefits of trade. could become a watershed for The TPF should begin work in these areas without delay in 2023 and begin laying the groundwork for a more integrated and resilient trade relationship. There is no better way to facilitate the shoring of friends with strategic allies than by pursuing FTAs.
This vision for FTAs is compelling. All we lack is political will.
Relations between the United States and India are likely to continue to grow in the years to come, even without a FTA commitment, but they will maximize their potential if their economic partnership lags behind their strategic ambitions. It cannot be used to With global instability threatening national strategic and economic interests, there is no better time to build foundational partnerships.
Mark Lynscott Adjunct Senior Fellow of the Atlantic Council’s South Asia Center. Prior to joining the Atlantic Council, he served as Assistant US Trade Representative for South and Central Asia from December 2016 to December 2018. He also previously served as Assistant US Trade Representative and Assistant US Trade Representative to the World Trade Organization (WTO). For the environment and natural resources. From 1996 until 2002, Mr. Linscott represented the United States on his WTO US Mission.
Gopal Nadadur Vice President of South Asia for The Asia Group in New Delhi. Previously, he was a researcher and policy expert at NITI Aayog, the Government of India’s leading policy think tank. Gopal also worked on the market team of the Clinton Health Access Initiative for over eight years. He got his Ph.D. He holds a bachelor’s degree in mechanical engineering from Pennsylvania State University and a master’s degree in public administration in international development from the Kennedy School of Government at Harvard University.
Irfan Nordin Senior Director of the Atlantic Council’s South Asia Center and Professor Hamad Bin Khalifa Al-Thani, who teaches Indian Politics in the Department of Foreign Service at Georgetown University.
