Some have referred to the expanding strategic partnership between China and Russia as the “most consequential undeclared alliance in the world.” How might this partnership affect the interests of the Indian people? What measures should India take to safeguard its ...
Answer: The office of the United States Trade Representative (USTR) maintains a list of countries that it classifies as developing, developed and least-developed. Countries that are classified as developing are allowed to export certain goods to the US without punitive tariffs that are usually imposRead more
Answer: The office of the United States Trade Representative (USTR) maintains a list of countries that it classifies as developing, developed and least-developed. Countries that are classified as developing are allowed to export certain goods to the US without punitive tariffs that are usually imposed on goods from developed countries. The ‘developing country status’ owes its origin to the US Trade Act of 1974, which authorized the Generalized System of Preferences (GSP) to help poor countries develop faster. These benefits were extended further under the WTO wherein rich countries agreed to grant trade benefits to countries that classified themselves as poor. About two-thirds of countries that are members of the WTO classify themselves as developing countries and avail benefits. Recently, the US removed more than a dozen countries including India, from its list of developing countries. The US administration has repeatedly accused fast growing economies like India and China of wrongly claiming trade benefits and wants to make these deals fairer to the interests of the US. Implications of this action are as follows:
- Higher tariffs: India has been one of the largest beneficiaries under the GSP with tariff exemptions amounting to $260 million in 2018. Now the Indian goods will have to face higher tariffs as compared to other developing countries which will negatively impact the exports of goods to the US and will hamper India’s export potential.
- Loss of exemptions: India was eligible for the 2 percent de-minimis standard under WTO rules, which exempted India from countervailing duty (CVD) investigation. Duty investigations for India will now be conducted. It would be easier for the US to penalize the country if it harms US industries with unfairly subsidized exports.
- Access to global market: Many other developed nations give India the GSP which might also be under consideration that would impact India’s market access globally and decrease its export competitiveness.
- Impact on agriculture: Due to WTO, India gets more subsidies than developed countries, and this includes agricultural subsidies. If it is designated as a developed country, these subsidies will be halved, if not more. It will have serious implications on agriculture and the farming community.
India is a unique economy wherein, a small part of the country seems like a developed country, but a large part of the nation is less developed or even under-developed. At the current stage of development, any attack on India’s status as a developing country will have a serious impact on its overall development. India needs to rebalance things and bring the USA on the negotiation table to turn things in its favour.
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Answer: The altering war in Ukraine and the lackluster military performance of Russia throughout the year has increased its dependence on China. A bulk of Russian energy exports are going to China, and the Chinese Yuan has emerged as an alternative currency for the payments to Russia. Also, recentlyRead more
Answer:
The altering war in Ukraine and the lackluster military performance of Russia throughout the year has increased its dependence on China. A bulk of Russian energy exports are going to China, and the Chinese Yuan has emerged as an alternative currency for the payments to Russia. Also, recently both countries signed two key agreements, Joint Statement on Deepening the Comprehensive Strategic Cooperative Partnership for the New Era and the Pre-2030 Development Plan on Priorities in China- Russia Economic Cooperation.
This increasing proximity between China and Russia, which is described by some experts as the ‘most consequential undeclared alliance in the world’, can have significant impact on India’s national interests as mentioned below:
The Russia-China alliance and their competitive relationship with the West are reshaping the world around India. India needs to draw up following strategies to protect its interests.
While some argue that India needs the USA to balance the rising Chinese power, yet by cooperating with China on specific issues and maintaining its military ties with Russia, it should be able to achieve its national interests.
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