Of shrimps and trade negotiations

So its shrimps now.

What the United States Trade Representative does not realise is that the ‘free trade’ mantra is very new to a vast majority of Indians. Just a few years ago even the BJP was singing “swadeshi” tunes. The good news is that “self-reliance” is a thing of the past, and more and more Indians are tuning in to open markets. When India started opening up, the first set of stories were negative; US companies patenting “basmati”, age-old herbal medicines, seeds etc. Business Process Outsourcing was the first game where Indians sensed that they could win too. So when the likes of Robert Zoellick defend a protectionist US stand over outsourcing, and worse try and link it to India opening up its agricultural markets it plays right into the hands of those who want to set the clock back.

But Mr Zoellick defended the proposed Senate legislation – even though he had assured India a year ago that he would oppose federal government moves to adopt similar measures tabled by several US state legislatures.[FT]

It is indeed very unfortunate that the USTR has decided to play hardball on this issue. India needs to open up – shed its subsidies and expose its industry to global competition. These are in its own long term interests. But the way the USTR has pitched it makes it appear that this is a concession to the United States.

It is not.

Just as it is not in the interests of the United States to ban outsourcing.

In all its complaints about the trade deficit vis-a-vis India, the US must realise that India has increased its share of world imports in recent years and it is importing more from a wider range of countries. The recent appreciation of the rupee can only further help increase demand for imports. If US exports to India are not rising, it is not because India is any more protectionist towards the US but because the US could be losing its competitive edge. Moreover, there are still controls in place that disable hi-tech exports to India from the US. So rather than fret, fume and complain, US policy makers must sit down with their Indian counterparts and understand what is staying the government’s hand.

If the world’s most powerful country turns to trade protectionism to protect jobs, what is a developing economy like India — with millions in structural unemployment and poverty — to do? Clearly, a bilateral dialogue on trade policy within a wider framework of the bilateral strategic relationship is called for. The US can easily be a partner in India’s progress rather than be portrayed as a hurdle. If Zoellick tones down his rhetoric and spares some time to listen, he may come across as a more friendly interlocutor.[The Indian Express]

Instead of re-starting the Doha round of WTO talks, Zoellick may have hardened positions in India.

Related Link: Edward Hugh writes that “the protectionist drift is running a coach and horses through the credibility of (the Bush) administration to present itself as a champion of free trade.”