GS 2 - Important International Institutions, agencies and fora - their structure and mandate.

Keywords - IPR, Trade surplus , 2+2 dialogue, special 301 Report, Totalization Agreement, Trade Policy Forum

Why in the News?

Recently, U.S. Trade Representative Katherine Tai and India’s Commerce and Industry Minister Piyush Goyal co-chaired the U.S.-India Trade Policy Forum, which was reconvened after a gap of four years.

About Trade Policy Forum

Trade Policy Forum (TPF) is a platform where both countries discuss diverse issues like agriculture, non-agriculture goods, services, investment, and intellectual property to address differences of mutual concern in a mutually beneficial manner. The idea is to deliver tangible benefits to both countries by resolving outstanding trade barriers concerns.

Areas of Divergence

1. One of most significant divergences, has been the size of the trade deficit that the U.S. faces in its trade relationship with India, which stood at about $23.5 billion in 2019.

2. In agricultural products, the U.S. demand for market access for its dairy products, cherries, pork/pork products and alfalfa hay for animal feed, while India quid pro quo seeks access for mangoes, grapes, and pomegranates.

3. In Intellectual property rights, India opposed the U.S. putting India on its ‘priority watch list’ of countries under its Special 301 report.

4. In investment barriers, Indian price controls on medical devices, the digital economy and its related taxation issues like equalisation levy are deep areas of divergence.

5. U.S. hard stand on visas for India’s professionals and skilled workers in the services sector are deep matter of concern for Indian BPO sector.
6. Social Security Totalization Agreement issue, although being discussed for over a decade, would allow workers from both countries to move their retirement savings, the lack of which particularly affects Indian IT workers in the U.S. who lose billions of dollars in statutory U.S. social security contributions that they cannot repatriate home.

Areas of convergence

1. The Indo-U.S. decided on working together on strengthening ethanol supply, will surely help India for its goal of 20% ethanol blending with petrol by 2025.
2. Two sides decided to partner with allies in developing a secure pharmaceutical manufacturing base and de-risk global supply chains in critical sectors like health.
3. India opted to join the OECD/G20 Inclusive Framework on adopting a common multilateral approach to taxation has been acknowledged by the US.
4. India’s decision to transition the equalisation levy it imposed on e-commerce transactions over time gives the U.S. side room to withdraw or lower some of the tariffs.
5. India adopted the Trade Margin Rationalization approach to price regulation on certain medical device products as a means to protect both Indian consumer and US supplier is appreciated by US government

Conclusion

In this pandemic period, when global dilemma of Omicron vs Open will going to persist for a while, it is desirable that both nations, brush their differences and bind their commitment, for stronger supply chain, secured Indo-Pacific and smarter newer lifestyle in a coming post covid recovery period.

Prelims Question

Q. Recently, a 'Trade Policy Forum' held. The forum is a trade aspects discussion platform between:

a.) Indo- Germany

b.) Indo-EU

C.) Indo-U.K.

d.) Indo- USA

Answer: d option

Mains Question

Q. As it is said by many diplomats , "The INDO-US has many areas of convergences than areas of divergences". Kindly elaborate the statement in light of recently held Trade Policy Forum between India and USA. (15 marks).

Source: Indian Express ,The Hindu