Suhasini Haidar
The latest decision by U.S. to withdraw GSP status is just one of a slew of announcements that will give Modi government cause for worry.
United States President Donald Trump’s announcement that Washington will withdraw the GSP (Generalized System of Preferences) trade status given to India 30 years ago came hours after former diplomat S. Jaishankar assumed office as External Affairs Minister, pointing to the fact that the immediate challenges before him will come from the U.S., and its “great power rivalry” with Russia and China.
While Mr. Trump’s decision, based on what he called India’s inability to assure the U.S. “that it will provide equitable and reasonable access to its markets”, is a continuation of the new tariffs and trade war he is now waging with China, it is just one of the slew of U.S. announcements in the past week that will give the Modi government cause for worry.
Trade ties with U.S.
Even without the GSP decision, the India-U.S. trade relationship had been under heavy strain for the past year, over what the Washington calls unfair trade restrictions on sale of dairy products and medical equipment, as well as proposed Indian regulations on data localisation and e-commerce companies operating here. Despite several rounds of talks on a comprehensive trade package, there has been no breakthrough, and Mr. Jaishankar will have to work with the new Commerce Minister Piyush Goyal to revive the talks, possibly when Secretary of State Mike Pompeo visits Delhi this month.
Buying oil from Iran
On Thursday, the U.S. Special Representative for Iran, Brian Hook, said plainly that the U.S. would sanction, without exception, any country that buys or has bought Iranian oil after the May 2 deadline. While India has not bought Iranian oil since May 2, it is yet to say categorically that it won’t, and the new External Affairs Minister is expected to make a clear policy statement on this soon. Russia and China have opposed the sanctions, and are likely to discuss this at the upcoming SCO (Shanghai Cooperation Organization) summit with Prime Minister Narendra Modi.
S-400 purchase from Russia
On Friday, a senior State Department official told a group of reporters in Washington, which included The Hindu, that the U.S. would also bring sanctions under the Countering America’s Adversaries Through Sanctions Act, CAATSA, against India, if it goes ahead with its purchase of the S-400 Triumf missile shield from Russia. The purchase would “preclude” a deep and broad defence relationship with the U.S., the official said. India has announced that it will get its first Triumf system by October 2020 and the $5.5 billion contract will be completed by April 2023, and unless the government changes plans, it is set on a collision course with the U.S. on the issue.
Partnering with China on 5G network
On Saturday, Acting Secretary of Defense Patrick Shanahan made it clear that the U.S. wants its partners to join in the ban on Chinese telecommunication company Huawei for its 5G technology. “Huawei is too close to the [Chinese] government,” said Mr. Shanahan, speaking at the annual “Shangri-La Dialogue” in Singapore, warning of cybersecurity and intellectual property issues with the company.
Mr. Shanahan’s warnings followed a stark message from Mr. Pompeo, who said during a visit to Germany on Friday that the U.S. may cut intelligence sharing with countries that choose telecom companies the U.S. doesn’t trust. India has thus far declined to ban Huawei from its process for 5G telecommunication network.
Modi's meetings at SCO, G-20 summits
Significantly, Mr. Modi will meet the leaders of all three nations: Mr. Trump, Russian President Vladimir Putin and Chinese President Xi Jinping this month at the SCO summit in Bishkek on June 13-14 and G-20 summit in Osaka on June 28-29.
With his new role, and the job of preparing for the meetings, Mr. Jaishankar — who for the past year served as a senior executive with the Tata group, and has in the course of his diplomatic career served in Washington, Beijing and Moscow — will have his task cut out.
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