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Osaka opportunity

How PM Modi approaches the trade question is not only central to India’s engagement with US, but also with all major economies

By: Editorial |
Updated: June 28, 2019 12:50:13 am
Osaka opportunity The Osaka encounter is likely to set the direction and orientation for a strategic partnership, arguably India’s most important.

At their meeting in Delhi on Wednesday, External Affairs Minister Subrahmanyam Jaishankar and US Secretary of State Mike Pompeo had earned their pay by finessing the articulation of the many differences that have cast a shadow over their partnership. They also sought to develop a framework to address the divergence, build on the convergence and identify ambitious new targets for cooperation. But the real work begins on Friday, when Prime Minister Narendra Modi sits down with US President Donald Trump on the margins of the G-20 summit in Osaka. The Osaka encounter is likely to set the direction and orientation for a strategic partnership, arguably India’s most important. If Jaishankar and Pompeo presented the opportunities and challenges before India and the US in a constructive way, Modi’s conversation with Trump is likely to be very different — “free and frank”, as diplomats tend to characterise a direct and difficult conversation. Ahead of their meeting in Osaka, Trump tweeted, demanding that India withdraw the recent tariffs it has imposed on US goods in response to US duties on steel and aluminium imports announced nearly a year ago.

At the joint press conference with Pompeo, Jaishankar conceded that the ability to resolve differences on trade is the biggest immediate test for the bilateral relationship. It is not going to be easy. Over the last two years, India has seen Trump launch trade wars against friends like Canada and adversaries like China. Delhi is not used to the kind of public badgering that Trump employs against his interlocutors. It must now deal with it. Modi must be prepared to hold his nerve amidst the prospects for reckless escalation by Trump. He must focus on negotiating the differences calmly. That is what China’s Xi Jinping and Japan’s Shinzo Abe and other economic partners of the US are trying to do.

How the PM approaches the trade question is not only central to India’s engagement with the United States, but also with all the major economies. Delhi’s failure to advance trade liberalisation in the last few years has frustrated all its major economic partners, including the US, European Union, China, ASEAN and Japan. Some of them, like the ASEAN, would like to simply bypass India. Delhi’s recent protectionist temptations are indeed tied to the lack of domestic reforms to make Indian industry and agriculture globally competitive. Coupled with the headlong rush to “data nationalism”, the PM finds India at odds with much of the G-20. Flush with a massive political mandate, Modi has an opportunity at Osaka to assure the world that India is ready for practical give and take on trade issues and on global data flows. An India that can’t reinvent itself at home, however, will find it hard to deal with the profound external challenges arising from the breakdown of the old trading order as well as the rise of a new digital economy.

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First published on: 28-06-2019 at 12:50:12 am
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