The first ever India-US “2+2” dialogue, with the participation of the foreign and defence ministers of both countries, is scheduled to take place in New Delhi on 6 September, after two earlier postponements, amid unresolved bilateral frictions on trade and economic issues, continuing Trump-induced uncertainties on regional and global issues, but in the wake of growing convergence of interests, and potential for enhanced security and defence cooperation.
For quite some time, India had been reluctant to agree to a “2+2” format with the US. It was seen as symbolic of close political-military coordination on regional and global issues. Hitherto, we had such a mechanism only with Japan, and that too at the secretary and not at the ministerial level.
The deepened dialogue with the US since 2000 on a wide range of issues, civil nuclear cooperation agreement signed in 2008, subsequent defence cooperation of the level of $15 billion, India being declared a major defence partner in 2016, support for India’s membership of NSG (Nuclear Suppliers Group) and other multilateral export control regimes, assessing India as a net security provider in the Indian Ocean and partner in the Indo-Pacific changed the context.
Following our Prime Minister’s visit to the US last year, the two countries agreed to launch the “2+2” framework. It was also no doubt a way to provide some ballast in the churning created by the Trump presidency.
Even though there is growing cooperation and convergence, it is still a relatively new relationship. Doubts and unfulfilled expectations abound on both sides. When high-level interactions are infrequent, frictions move centre stage. This had happened earlier in the 2012-14 period, when differences on market access, intellectual property and localization of production, dominated the discourse. Even as such issues may persist and are discussed, high-level reiteration of convergences and importance reinforce the context within which disagreements would need to be tackled.
Differences on trade and economic issues are once again posing challenges. Trump has called for reducing India’s $30 billion trade surplus with the US, even though we have an overall trade deficit, and the Indian figure pales in comparison with China’s $350 billion surplus. Indian tariffs, market access, intellectual property, GSP benefits for some labour-intensive Indian exports to the US, and Indian price caps on medical devices are among the issues receiving enhanced scrutiny in the ministerial level Trade Policy Forum. The US has also not given India exemption from additional tariffs it had recently imposed on aluminium and steel imports, ostensibly on national security grounds.
A second set of challenges relate to unilateral US sanctions on Iran and Russia. As of 6 August, US dollars cannot be used in Iran-related transactions. From 4 November, India will need to show significant reductions in oil imports from Iran, if the importing Indian entity is not to come under US trade and financial sanctions. At a time when oil prices are rising and the dollar value of rupee has fallen significantly, this will add to India’s import bill. We are having to face collateral damage from a unilateral US decision, without any mitigating support.
The “2+2”, therefore, has its task cut out. It should reinforce the positive in the relationship, and set a vision looking beyond the frictions and short-term uncertainties.
Arun Singh is a former Indian ambassador to the US.