The world trade is changing fast. It is a unilateral direction. The US President Donald Trump is deciding the course. He raises the pitch, shouts at his G7 colleagues, reprimands India and to the surprise of all flies in to Singapore long before the talks were to begin with Supreme Leader of North Korean President Kim Jon Un and waves olive branch to the enemy number one.
No one knows what denuclearization Kim has done.
A war that had begun in 1953 certainly has come to an end. The supposed unpopular Trump has done what a popular former US President Barack Obama could not do. He used his tariff hike against China, South Korea and Japan to know his line, help him in negotiations with Kim and the ultimate solution.
Would it also force China to change its tack in South China Sea? Not unlikely.
The White House is likely to use the summit to frame Trump as a daring peacemaker as he heads into troublesome midterm elections. He is emerging as the biggest negotiator and at his terms. It puts all multilateral dialogues including World Trade Organisation in shadow.
Is the US undoing what the Dunkel Draft, Marrakesh agreement and GATT replacement had done to establish World Trade Organisation (WTO) On January 1, 1995? The US had many reservations. It had never agreed to many issues, including on agriculture, pollution and now steel.
India has benefited from the multilateral organisations be it GATT, WTO or others. It has effectively used WTO to impose anti-dumping duties on exports from China, Malaysia, Korea, Thailand, South Africa and the US.
After the March hike on duties on steel and aluminium by Trump, India moved the WTO for 100 percent duties on 20 products like almonds, apple and specific motorcycles imported from the US from next month.
India hoped if it hit the small farmers there it would pressurise the US government. Trump instead of rolling back the duties on steel hit out at India at G7 meet in Canada. Trump said, “This isn’t just G7. I mean, we have India, where some of the tariffs are 100 percent. A hundred percent. And we charge nothing. We can’t do that.” He even went out to threaten to stop doing trade with countries “who are being unfair” to the US. He was specific and asked why India should levy 100 percent tariff on Harley Davidson imports and zero on Indian bike exports to the US.
Indian never faced such situation before. It has to invent new strategies.
It has certainly put New Delhi in a piquant situation. Trump has projected India as the highest beneficiary of American largesse. It was sharper than what Obama did to stop Indian ingress in the Silicon Valley.
Trump did not leave anyone. He was caustic with Canada, France and Germany. The world’s richest country is today non-accommodative.
India has to look for a new strategy. India is the largest beneficiary of the US generalized system of preferences (GSP). It allows 3,500 Indian products, including chemicals, textiles, engineering, gems and jewellery, access to US markets at zero or very low tariffs. Through GSP, India exports $ 5.6 billion every year.
Trump has questioned Indian swadeshi and sought the relevance for “Buy American”. He says, “Fair trade is to be called Fool trade if it is not reciprocal”.
An answer to this is not easy to find. Every country wants to increase its access to the richest US. Trump’s shrill cry that the US is the piggy bank for everyone has now made the world rethink.
India’s immediate concern is not merely Trump’s ante but its exports, rise in current account deficit (CAD) to $ 13 billion or the trade gap that has risen to 1.9 percent of GDP from 0.6 percent.
The rise in oil price, fall in rupee value and not so bright other activities are a matter of concern. India is not in a position to make sharp criticism as the French President Emmanuel Macron did at G7 after Trump left for Singapore, “international co-operation could not be dictated by fits of anger and throwaway remarks”. Or make a remark like German Chancellor Angela Merkel who said, “Mr Trump’s decision to reject a joint communique was “sobering” and “depressing”.
But finally at G7 there was a joint communiqué. So Trump disagrees to agree. This possibly is his winning style. India has to learn from it. It is just not making friends that international diplomacy is but also calling the spade a spade.
Trump has successfully done that to shed his image of being a war monger as Macron would like to say but to extract the maximum from the world community. It is a different negotiating process.
The world has to realise that 23-year-old WTO has seen many changes since 1995. The voice against GATT was being raised before 1970s. The WTO may have outlived its life. It cannot be a mere distress resolving mechanism for the downtrodden. The world may have to rethink how to maintain multilateral organisations, not only for dispute resolution but also continuing the dialogue.
Trump has exhibited that he can blow hot or cold but he takes to a solution – of course that is to his liking. He is shrill but gets to his point through negotiated settlement as did with Kim and nobody knows that he has really given up his nukes. Kim has been sharp enough to agree to talk and get away with it.
This is the new world diplomacy. Countries would have to adapt to the new situation. As the world economy is in turmoil, conflicts are natural. However, these cannot turn into a bloody brawl. Diplomacy is becoming sharper, subtler and swift. The WTO may have to be replaced or renegotiated but simultaneous dialogues – track two or three diplomacy – have to continue.
The world with NAFTA, ASEAN, EU, BRICS and SCO is becoming more regionalized. Swadeshi is the global theme causing conflict and regional comfort. The world is integrating and ghettoized. Interests are overlapping. There has to be more give and take. The countries who understand it would be the winner. Changing the tack, however, is a must, including for India for leading the process of world intergration and progress.
(Views expressed are personal)