Well done Team U.S.A.
This is a very significant trade development as it is the culmination of a lot background work and a trilateral trade alliance based on economic nationalism. The U.S, Japan and India have been working on the Indo-Pacific trade reset for several years.
Prime Minister Shinzo Abe and President Trump already sealed their component. Now it appears India and the U.S. have reached terms. Very important. First, the report:
NEW DELHI (Reuters) – India and the United States are closing in on a trade deal, India’s Commerce Minister Piyush Goyal said on Tuesday, after two years of negotiations.
“In the long term, I believe we have a quick trade deal which has some of the pending matters built up over the last couple of years, which we need to get out of the way quickly. We are almost there,” Goyal said at the U.S.-India Business Council’s India Ideas Summit, being conducted virtually.
Both New Delhi and Washington should also look at a preferential trade pact with 50 to 100 products and move to a free trade pact in the long term, Goyal said. (read more)
As we noted in October 2019: In the bigger picture… Within the trade team, Commerce Secretary Wilbur Ross was positioned with primary responsibility toward the EU and India. Ross clear-cuts through the politics, explains Trump’s objectives amid the trade proposals, and paves a path for U.S. Trade Rep Bob Lighthizer to engage his counterparts.
India has always been a key strategic nation within the global trade-realignment taking place by the Trump administration. Underpinning the geopolitics, the “Indo-Pacific” strategy is structurally the decoupling of the U.S. from China.
As a part of the strategy President Trump positioned the ASEAN (Association of Southeast Asian Nations) as benefactors in manufacturing & trade as an outcome of the U.S. decoupling from China.
However, India had genuine concerns about the global dynamic. Specifically, India is worried about allowing the multinationals to have influence over their economy and social structure. In this regard India was not wrong; their concerns were not unfounded.
We can all see, heck we’ve lived through, massive multinational corporations quickly gaining too much influence; including -eventually- corporate influence over the politics of a nation. That corporatism inherently leads to corruption.
When Americans see it in other nations we call it “bribery and corruption”, but when it happens in Washington, DC, we call it “lobbying”; the process is exactly the same.
As a consequence of the concern, Indian Prime Minister Modi was straddling the fence while President Trump tried to influence him to come over to the side of ‘free markets’.
In an effort to dissuade the corrupt multinational concerns of Modi (and Trump clearly indicated he did see validity within the concern), President Trump used Japanese Prime Minister Shinzo Abe as an example of what can be possible with economic nationalism.
President Trump (USA), Prime Minister Abe (Japan) and Prime Minister Modi (India) have held several very unusual trilateral discussions as this dynamic has played out over the past three years. The concerns expressed by India were valid; however, so too is the opportunity… that’s where Secretary Wilbur Ross comes in:
India and the United States have spoken openly about the ups and downs of their current trade negotiations. Their discussion at the 2019 Forum’s India Economic Summit revealed new insights into both sides positions – and a key sticking point.
US secretary of commerce Wilbur Ross and Indian Minister for commerce, industry and railways, Piyush Goyal represented the US and India, respectively. WATCH:
Prime Minister Modi, as represented by Minister Goyal, was concerned about the influences that comes with allowing massive foreign investment. Secretary Wilbur Ross never diminished the concern because structurally that negative outcome, an outcome of corporate influence, is exactly what President Trump is now trying to untangle in the U.S. economy.
If President Trump is successful a new era of national trade will be based on genuine reciprocity and economic nationalism. Prior decades of allowing corrupt multinational corporate influence have created massive social inequities.
These inequities, both domestic and global in nature; driven almost exclusively by corporate greed to the benefit of multinational interests; allowed China to strategically step-in, open their doors and take advantage.
Fast forward to the past ten years and China is holding their national interests -and grip over prior investment- like a ‘sword of Damocles’ over the heads of the global corporations. As President Trump has said: “I don’t blame China … I blame stupid politicians”. The COVID-19 crisis made the issues even more visible.
In many ways President Trump was asking Prime Minister Modi to join in a network of nations and help the U.S. correct the current issue that personifies what Modi was worried about happening to India in the future.
Lastly, and here’s the important part; this is the part the global financial media seem to miss…. When you look at all of this ancillary geopolitical activity taking place toward the objective; you see it is all connected to a singular goal…. President Trump was never negotiating a “deal” with China, he was strategically decoupling the U.S. from China.
If Trump wasn’t decoupling from China, then all of these conversations with Mexico, Canada, the U.K., Japan, South Korea, Vietnam, Indonesia, Australia, Brazil and India would not be taking place in the clear manner and sequencing we have seen.
For some reason the global financial media cannot see the connective tissue between Wilbur Ross’s statements in India and the U.S. policy toward China.
“There are trillions at stake”…