Published on Jun 25 2019
United States President Donald Trump has opened up a new front in his ongoing trade wars by stripping India of its preferential trade status from June 5, after deciding that Delhi was not playing ball in providing market access to American products.
The punitive measure to withdraw products from India from the Generalised System of Preferences will affect US$6.35 billion worth of Indian exports to the US, out of a total of US$51.4 billion in 2018, according to the Federation of Indian Export Organisation. India is the world’s largest beneficiary of the programme, which allows developing economies to export their products duty free to the US.
However, Indian Prime Minister Narendra Modi’s government, freshly re-elected only a fortnight ago, has played down the development, calling it part of a “regular process”. The trade decision to penalise India is at odds with America’s Indo-Pacific strategy, a report of which was recently unveiled at the Shangri-La Dialogue in Singapore, and which lists India among the major partners of the US in this collective endeavour.
The report, titled “Preparedness, Partnerships, and Promoting a Networked Region”, is the distillate of the Trump security vision for the Indo-Pacific region, and notes that the US and India maintain a “broad-based strategic partnership” and asserts that this has “strengthened significantly during the past two decades, based on a convergence of strategic interests”.
The report states the primary concern for US national security as: “Inter-state strategic competition, defined by geopolitical rivalry between free and repressive world order visions”. China is identified as the revisionist power determined “to reorder the region to its advantage by leveraging military modernisation, influence operations, and predatory economics to coerce other nations”.
Delhi shares many of these concerns about China in relation to its own troubled bilateral relationship with Beijing and the manner in which the Chinese footprint is increasing in the South Asian region in recent years. An unresolved territorial and border dispute that led to the short October 1962 Sino-Indian war is at the heart of the Indian security concern, and this has been exacerbated by the deep and opaque Sino-Pakistan cooperation on weapons of mass destruction. Pakistan’s weapons deals with China have encouraged Islamabad to remain invested in support of terrorist groups directed against India, and this issue bedevils the Delhi-Beijing relationship, despite all the conciliatory rhetoric from the political apex in both capitals.
However, it would be misleading to infer from this summary that there is indeed a “convergence” of strategic interests between the US and India. A “correspondence” of security concerns in some areas, yes, but the US-India dissonance in other domains is very visible and appears intractable on Trump’s watch.
Leading the list of nettles is Iran, followed by Russia. Late last year, the Trump administration reimposed sanctions on Iran in a bid to cripple its economy to force it to halt its nuclear activities and its support of terrorism. The US has also threatened with sanctions any country that continues to import hydrocarbons from Iran after May 2. India, which obtains over 11 per cent of its total crude oil imports from Iran, has been forced to comply, along with others such as Japan and South Korea. China, incidentally, has not accepted this diktat.
The other discordant area is India’s long-standing reliance on Russia for its military inventory. India made a deal last October to buy the S-400 missile shield from Moscow, another subject of US sanctions. The US wants India to consider alternatives; India wants the US to grant it a waiver from the Countering America’s Adversaries Through Sanctions legislation.
India’s strategic dilemma of how to prudently manage its contradictory relationship with the US, such that it does not have to make a binary choice between Washington and Beijing, is one that was echoed by most countries at the Singapore dialogue. What is distinctive about the Indian case is that it has the potential to be a valuable strategic “swing state” for both the US and China.
Managing the growing challenges to US primacy against the backdrop of a rising China is central to the grand American strategy post-cold war. It was the considered assessment in the Washington beltway in mid-2005 that a stable and cordial partnership with India was necessary for the larger US global strategic objective. This policy focus has been consistent throughout the Bush-Obama-Trump continuum, although the transactional element has become the dominant priority for the US.
Paradoxically, despite the uneasy ties with India and the many intractable issues, Beijing is aware that a breakdown in this bilateral relationship would drive Delhi closer to the US and thereby impede President Xi Jinping vision of China as the world’s leading power by 2049.
The US-China tension over their competing visions of the Indo-Pacific region was palpable at the Shangri-La Dialogue and China’s defence minister General Wei Fenghe warned that it would be “very dangerous” to underestimate Beijing’s will over territoriality.
In its conclusion, the US Indo-Pacific strategy report reiterated: “As great power competition returns, we will continue to invest, act, and orient ourselves to ensure that the principled international order from which all countries in the region benefit endures.”
Towards this end, while dwelling on the relevance of a multinational lattice of partnerships, US Acting Defence Secretary Patrick Shanahan said in Singapore that America was increasing the “scope, complexity and frequency” of its military engagement with India.
Clearly, the US-China-India strategic triangle has been buffeted by the contradictory compulsions that currently roil their relationships and the waters of the Indo-Pacific. Delhi has to navigate in a deft manner.
Source: South China Morning Post, 6 June 2019, https://www.scmp.com/comment/opinion/article/3013104/wary-china-india-draws-closer-us-just-not-too-close-loss-its