Less conflict, but U.S. pressure to open up trade will persist

Washington watchers believe Joe Biden’s victory in the US Presidential elections will mean the rising trade friction we witnessed in the fading years of the Trump presidency would be de-escalated. Under Trump, the US had slapped higher punitive duties on our exports, taking away the privilege of exporting some 4,000 product lines duty-free, as part of pressure tactics to prise open Indian markets. While Biden’s team is unlikely to go with the unpredictable and often whimsical trade warfare of the recent past where friends and foes were equally targeted, it would be simplistic to expect the US to lessen its pressure on India.

Opening up India to exports and to investment in banking, insurance and retail remain long-term goals of the US business community and of its administration, whether Republican or Democratic. Attempts to open up our retail and financial markets were started during Clinton’s presidency and continued with vigour in Bush’s and Obama’s tenures. To expect the incoming administration to lessen the pressure on behalf of Amazon and Walmart to relax retailing rules or on behalf of WhatsApp and GooglePay in the payment banking sector would be to live in a fool’s paradise.

It is true that in this Covid era, Biden’s immediate priority will be more domestic and crisis-driven. The focus in the first year will be on tackling the health emergency in the US and solving the unemployment crisis there. But domestic politics always has global ramifications. To save and create jobs, the US will perforce have to try and ratchet up its export volumes.

Democrats have been known to be more protectionist than Republicans and concessions to India on trade will likely come only at the cost of deep tariff cuts offered to US manufacturers and more sops to American retailers and bankers. Possibly the only saving grace for Indian negotiators would be that they would have to no more contend with sudden fiats from Washington. There is also hope that trade-offs on trade and investment could perhaps be more easily tied up with deals on the strategic front, where the US would still like to contain China and look towards India as an ally and partner.