CUTS Washington Monthly Brief
#23, February 2020
Capitalise On the Momentum Created And Consensus Achieved
On February 24th and 25th, the 8th U.S. presidential visit to India has remarkably contributed, albeit from a political economy perspective, to the advancement of the Indo-U.S. relations. Not only was that the first state visit of the U.S. President Donald Trump but also a first standalone visit to India by a U.S. president so far without covering other countries.

Upon arrival, the enthusiasm of hundreds of thousands of people that swelled along President Trump’s way to the world’s largest, ‘Sardar Vallabhbhai Patel (commonly known as Motera) Stadium’ at Ahmedabad plus over 100,000 people present to hear and cheer him there was indeed absorbing.

Later on, besides other engagements, the meeting between President Donald Trump and Prime Minister Narendra Modi along with respective delegations in New Delhi emphasised that both the sides must deepen mutual cooperation on trade, technology, connectivity, security and regional stability. It also saw upgradation of bilateral relations to ‘Global Comprehensive Strategic Partnership’. As a part of that, the two leaders reaffirmed a rules-based order in the Indo-Pacific and global commons.

However, the meeting fell short on providing substance on the trade and economy front. Except securing joint affirmations to negotiate (and conclude) a larger deal on trade, presumably a Free Trade Agreement, no timeline was discussed. Without that, the two countries risk leveraging the efforts put by the trade negotiators over the last two years and the momentum created overtime for taking the relations to even higher levels. A recent article of ours propose that how the two countries may further negotiations in a flexible manner by clearly defining offensive and defensive interests as well as the red lines.

Other than that, the meeting was successful in advancing bilateral defence and energy ties, among other things. Not only did it mark the growing U.S. sales of advanced military helicopters, equipment etc., to India but also facilitated memorandums of understanding on ‘mental health’ and ‘safety of medical products’ along with a letter of cooperation to expand gas distribution infrastructure in India. It also witnessed a pledge of support to facilitate joint development and production of weapons systems by enabling transfer of advanced military technology from the U.S. to India.

In view of that, let’s hope that both the countries now endeavour to effectively capitalise the momentum created and consensus achieved for advancing bilateral relations.
Pradeep S. Mehta

P. S. How helpful the U.S. Agreement with Taliban for ‘’conditions based reductions’’ of its troops from Afghanistan will be in fostering stability in the region ‘in general’ and enabling India secure its economic and development interests ‘in particular’?

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Modi, Trump Discuss Totalisation Agreement as India Seeks $12Bn Worth Savings of Its Professionals in US
At the recently concluded visit by US President Donald Trump, India took up the issue of a Totalisation Agreement apart from the H1-B work visa matter pertaining to Indian professionals in the US. Totalisation is broadly the money that Indian professionals contribute to the US social security scheme while they work in America. Many head back home before 10 years, which is essentially the lock-in period before one can withdraw from the social security contribution. Hence, such professionals have to leave their savings behind.
US may soon start denying Green Cards to immigrants seeking public benefits
The United States on February 24th will begin enforcing a regulation that could deny green cards or legal permanent residency to legal immigrants who seek public benefits like food stamps. The move might affect a number of Indians who are on H-1B visas and are in long ques to get permanent legal residency. The decision follows the Supreme Court's ruling which lifted the final remaining injunction on the 'public charge' regulation.
India to go slow on trade deal with US, both sides to work on wider FTA
After the euphoria over US President Donald Trump’s visit died down amid no clear deadline for concluding a trade deal, India is now aiming to go slow on the negotiations front.But rather than planning a limited trade pact, both sides now want to create a comprehensive free-trade agreement (FTA) which will be wider in scope. Senior officials said both nations have agreed to go back to the drawing board and prepare better concession offers on most issues. They include medical devices, agriculture and high-value tech goods.

The Biggest Fan Of Trump’s Steel Tariffs, Is Suing Over Them
John Hritz, president and chief executive officer of JSW Steel USA Inc., put on a big smile and a Texas flag pin for his television spot on Fox Business in March 2018. “It’s a special day,” he told his host, then told her again: “It’s a special day.” JSW Steel’s India-based parent company, JSW Group, had announced it would invest $500 million and create 500 jobs at its steel mill in Baytown, Texas. “We’re going to make history,” Hritz said.


Emerging trends in India-U.S. oil and gas engagement
Oil and gas trade is emerging as a new area of engagement between India and the United States against the backdrop of increasingly complementary interests. The emergence of the United States as the world’s top oil and gas producer in the last few years dovetails perfectly with India’s energy-deficient status and growing demand.
Senate energy bill includes investment in solar and energy storage
After a full year of hearings, business meetings and bipartisan negotiations, U.S. Senators Lisa Murkowski (R-AK) and Joe Manchin (D-WV), released the text of their energy innovation package. The American Energy Innovation Act (AEIA) will modernize domestic energy laws to ensure the United States remains a global energy leader while also strengthening national security, increasing our international competitiveness and investing in clean energy technologies.

India Plans Incentives To Woo Renewable Energy Companies Back To Auctions
India is struggling to attract renewable energy companies to set up new projects. Multiple factors, like delays in setting up transmission support infrastructure, delays in payment by off-takers, threats of retrospective changes to power purchase agreements, and delays in regulatory approvals have pushed developers away from recent tenders.

Coronavirus Impact On Oil Is Worse Than Expected
Russia continues to refuse to announce its position regarding deeper cuts by the OPEC+ coalition, but admitted that the coronavirus outbreak could lead to additional downward revisions to the global oil demand growth outlook for 2020.The spread of the coronavirus outside China could lead to further downward revisions to global oil consumption, Russia’s Energy Minister told reporters in Moscow on 27th February.


ASEAN members start standing up to China's maritime aggression
For decades, Beijing has sought to co-opt and lure its Southeast Asian neighbors into acquiescence with its maritime expansion through a package of economic incentives, military intimidation and a diplomatic charm offensive.
White House proposes $1.5 billion for Indo-Pacific region
The Trump administration has proposed $1.5 billion in budgetary allocation for 2021 fiscal for the crucial Indo-Pacific region, which it said was part of its efforts to ensure that the region remains “free, open, and independent of malign Chinese influence”. “The future of the Indo-Pacific, which contains roughly half the world’s population and many of the fastest-growing economies, is critical to U.S. security and long-term economic interests,” the White House said in its budgetary proposal for the financial year 2021, beginning October 1, 2020.

Historic peace deal in Afghanistan reached with Taliban, allowing withdrawal of US troops
U.S. and Taliban negotiators signed a historic agreement February 29th in Qatar that could end 19 years of war in Afghanistan and allow President Donald Trump to begin the promised withdrawal of American troops. The four-page pact spells out a timetable for the United States to withdraw its 13,000 troops from Afghanistan; in exchange, the Taliban agreed to sever its ties with al-Qaida, the terrorist group that launched the 9/11 attacks against the U.S.

India Mulls Buying New Frigates From Russia While US Threatens New Delhi With Sanctions Over Purchase Of S-400 missile System
Despite the modernization of India’s defense industry, Indo-Russian military cooperation is still strong — and two Talwar-class frigates will be delivered to New Delhi in 2024. But could competition from the US get in the way? As part of a $2.2 billion deal with Moscow, the pair of warships, currently under construction at the Yantar Shipyard in Kaliningrad, will be delivered in two years — and two additional frigates will be built domestically at India’s Goa Shipyard under a technology transfer agreement.


United States will remain India’s key partner across all domains in the future
India-US relations will continue to grow in the years ahead for many reasons. The economic dimension is all-important to the US. India, already the fifth largest economy, could become the third largest in a decade, and possibly, the second largest by 2050. This prospect, which makes India’s huge market and talented human capital a great economic prize, will continue to drive India-US ties.
Huawei’s 5G trouble: A bitter pill that the world must swallow
One, it needs to ensure that the country also grants it permission to participate in the final 5G deployment, and not restrict the permission to mere trials. Recent research by Oxford Economics, commissioned by Huawei, suggests that barring Huawei from participating in 5G rollout could result in a $4.7 billion loss to India’s GDP by 2035. A few other countries would also suffer greater losses.
The 4 mn-strong Indian community in US is now increasingly politically vocal
US President Donald Trump joining Indian Prime Minister Narendra Modi at a 50,000-strong Indian diaspora ‘Howdy Modi’ event in Houston, Texas, in September last year, staying on after his own speech for Modis hour-long comments, and subsequently doing a joint lap of the stadium, was a stark recognition of the enhanced role of the 4 million Indian-American community.

Soon, goods can be moved between India and Russia via Iran
The show of affection between India and the US during President Donald Trump’s visit has not deterred India from taking a step forward in using transport infrastructure to connect with Russia much faster through Iran, a country in spotlight for facing the US sanctions. Within three months, traders from India and Russia can move goods between the two countries through Iran, said Container Corporation of India (Concor) CMD V Kalyana Rama on Tuesday evening.