Trade And Climate, The Pivot For India-U.S. Ties

Context: Strategic alliance between India and the United States have a long way to go before they can inspire confidence that this blossoming alliance will endure for the long term.

Areas of convergence in India-U.S. partnership

• Creating a free and open Indo-Pacific that advances democratic values and confronts autocracies globally and locally.
• Shared concerns regarding China: This provided the much-needed impetus to India-U.S. partnership.
  • Both view China, the emerging superpower on the global stage, as a strategic competitor.
• Climate mitigation: Both countries are taking leading roles in articulating their climate concerns and commitments.
  • Eg: Indo-U.S. collaboration under the Climate and Clean Energy Agenda Partnership.
• Trade prospects: Both prioritising bilateral trade relationship by re-chartering the Trade Policy Forum.

Issues in India-US partnerships

• Excessive focus on containing China neglecting other aspects of bilateral relations.
  • Strategic partnerships capable of re-shaping international global order cannot be based simply on a negative agenda.
• Poor response to India’s rhetoric of climate justice by U.S. negotiators, particularly if it aligns with China’s messaging and obstructs efforts to reach concrete results.
  • After announcing a net-zero goal for 2070 India has called for western countries to commit to negative emissions targets.
• Limitations on trade front: Failure of US and India to articulate a shared vision for a comprehensive trade relationship raises doubts about their seriousness about bilateral trade.
  • Current protectionist tendencies of both countries and, timing of US mid-term election closing political window for achieving problem-solving outcomes and setting a vision on trade for future.
• Possibility of new climate and trade tensions:  As India insists that technology is transferred in ways that undermine incentives for innovation in both countries.
  • Eg:Complexities if US decides that imports from India be subject to increased tariffs in the form of carbon border adjustment mechanisms or “CBAMs”.
• Distrust on global institutions: As India-US has dithered in pursuing cases in WTO and settling them, China has effectively captured global market, leaving each dependent on a source they view as a threat.

Way forward: Creation of net positive climate-trade inter-relationship

• Climate policy coordination: Coordinating policies to incentivize sharing of climate-related technologies and align approaches for reducing emissions associated with trade.
  • Commercial dissemination of cutting-edge carbon mitigation and adaptation products and technologies to check carbon emissions.
• Amicable resolution of disputes in WTO Eg. Case on solar panels.
• Charting a path that allows trade to flow for transitional energy sources, such as fuel ethanol.
  • India shall relook import ban on fuel ethanol and leverage closer collaboration with US and Brazil.