CUTS Washington Monthly Brief
#13, April2019
Time is ripe for the U.S. (and others) to prevent further trade skirmishes

Over the past couple of centuries, role of international trade in determining a country’s greatness has grown tremendously. It intensified particularly through the second wave of globalisation under the U.S. leadership post World War II. The U.S. has seeded and empowered the voices of free and open markets through Bretton Woods institutions, implementation of General Agreement on Tariffs and Trade and the World Trade Organisation. This resulted in creation of an ecosystem wherein economies, societies and markets interact, integrate and remain interdependent. 
However times have changed and today we face a scenario where U.S. President Donald Trump vehemently asserts that ‘’trade wars are good and easy to win’. Such a proposition from the President that represents a country that created rules based and liberal economic order is dangerous. It can result in a negative effect on U.S. businesses, markets and consumers who thrive on free markets philosophy and also damage the liberal values that Americans have persevered over a long period. 
In fact, in the recent past the Lowy Institute of Australia has looked at factors including trade in determining a country's "power" and found some significant changes in "power gaps" between the U.S. and China in particular.  In essence, it indicates that if U.S. (for that matter any country) ignores "trade" as one of the important pillars of their foreign policy relations then it will be at its own peril.
‘’Tit-for-tat’’ tariffs have mostly exacerbated the interests of American businesses, consumers and its partners. In our recent column: "Trump Must Avoid Trade Wars to Make America Great Again”, we have argued as to why President Trump must reflect that America has been great before and can continue to be so by preventing further trade skirmishes and safeguarding economic interests of American businesses and consumers including that of its partners.
There has to be an alternative approach. For example, India has trade concerns with China and so does President Trump. But is our objective to reform and improve China? Or, is it about destroying them? While the Europeans are following the former (and so are the Japanese, the Koreans and the ASEAN countries), President Trump is hell bent on the latter. Thus, India would need to engage with the Europeans and ASEAN+ to reform and improve China as otherwise "destroying" strategy will be hugely counter-productive for all of us.

Pradeep S. Mehta
P.S.  U.S has ended waiver on Iranian oil to India and has asked India  not to buy oil from Iran or face strict measures. How fair is it?

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This is the thirteenth edition of the Monthly Brief from the Center, which carries select published news or comments on a relevant issue. There are equally important issues which may have been missed out to keep the Monthly Brief short and swiftly readable.
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US-India bilateral exchange up 12% in 2018 amid the noise of trade war
Amid the hullabaloo over the trade war between India and United States, bilateral exchange of goods and services between the two nations has risen 12.6 per cent to $142.1 billion in 2018 from $126.2 billion in 2017.
Trump says sees possibility of U.S.-Japan trade deal by May
President Donald Trump said on Friday it is possible that the United States and Japan could reach a new bilateral trade deal by the time he visits Tokyo in May, but he and Japanese Prime Minister Shinzo Abe cited areas where they differ on trade.

EU to Begin Trade Talks With U.S. as Tariff Threats Escalate
The European Union gave the green light to start trade negotiations with the U.S., as both economies seek to rebuild frayed relations a week after threatening each other with billions of dollars in new tariffs over a 14-year-old aviation dispute.
Lagarde Says Trade Spat May Dent Business Confidence
The world economy is enjoying the fastest and broadest expansion in years, though risks remain amid early signs of a potential trade war, the specter of tighter financial conditions as well as increased public and private indebtedness.

Mexico now biggest US trading partner, data shows
Mexico has now become the biggest U.S. trading partner, jumping ahead of Canada and China that have previously held the top spot, according to recent government data. Transactions with Mexico made up 15 percent of U.S. trade in February, according to federal data released last week, edging out Canada at 14.2 percent and China at 13.9 percent.


Now US may offer oil to India on concessional terms
The US may offer oil and gas to India on concessional terms from its own reserves to help the country tide over lifting of Iran sanction waiver that would suck out close to 10% of Indian crude imports. Diplomatic sources said the talks between Indian officials and the visiting US Principal Deputy Assistant Secretary of State for South and Central Asia, Alice Wells, on Tuesday focused on ways to ensure that India does not face oil shortage.
India, China step on the gas on oil sourcing plan
China and India, the world’s second and third largest oil importers, respectively, are nearing an arrangement to form a buyers’ bloc to bargain collectively for oil supplies and reduce the influence of the Saudi Arabia-led cartel on oil prices, according to three officials aware of the development.

Modi’s Progress on Natural Gas Pricing
When Narendra Modi became prime minister in 2014, natural gas from domestic sources was to play a big part in his strategy for meeting the energy and environmental goals of his government. Price decontrol was to be a chief tool for increasing production.

How the US decision will affect oil markets globally
Six months after the US rocked oil markets by letting Iranian exports continue, its decision to end sanctions waivers that allowed shipments is also set to reverberate across the globe. It marks a change in direction from November last year, when the Donald Trump administration granted waivers to eight importers as it sought to temper fuel prices ahead of American mid-term elections.


China Exploits Fleet of U.S. Satellites to Strengthen Police and Military Power
Orbiting 22,000 miles above Earth, a fleet of American-built satellites is serving the Chinese government in ways that challenge the U.S. Nine of these satellites have been part of efforts to connect Chinese soldiers on contested outposts in the South China Sea, strengthen police forces against social unrest and make sure state messaging penetrates far and wide, according to corporate records, stock filings and interviews with executives.

BRI meet ends with ‘$62bn in deals & changes in structure’ 
The three-day Belt and Road Forum ended on Saturday with China announcing that it was modifying the structure of the infrastructure-building programme. Chinese president Xi Jinping also announced that new project deals worth $62 billion were signed with several countries during the Forum.
Global Media on the outcome of second Belt and Road Forum
The second Belt and Road Forum which were held from 25-27 April in Beijing ended with a pledge by China that it would allay concerns around BRI debt mechanisms. Xi called for countries and global institutions to come together to foster greater international cooperation under BRI. However, the takeaways from the forum still seem to vary for countries around the world.

India goes for diplomatic fishing in the Pacific
As the Ministry of External Affairs’ (MEA) new division — the Indo-Pacific desk — became operational this week, it perhaps signifies a shift in India’s foreign policy from being segmented and dealing in silos to a more amalgamated approach.
India, US discuss deepening Indo-Pacific cooperation as China hosts BRI meet
India and the US on Thursday discussed ways to deepen their defence partnership including cooperation in the Indo-Pacific region, during a visit by Randall G. Schriver, Assistant Secretary of Defence for Indo-Pacific Security Affairs starting on Thursday.


I would say that I did not get a fair trial … but now the legal course is done’
Convicted in June 2012 on three counts of securities fraud and one count of conspiracy, Rajat Gupta, former head of McKinsey & Company and director at Goldman Sachs, among others was sentenced in October 2012 to two years in federal prison and a $5 million fine in one of the most high profile insider trading cases.
An optimal way to usher small businesses into the digital age
Globally, the role of digital platforms in the internet economy is increasingly coming under scrutiny. Key concerns relate to exploitation of consumer data and behaviour by platforms without appropriate consent and privacy protocols.
Around 200 US companies looking to shift manufacturing base from China to India, says USISPF
About 200 American companies are seeking to move their manufacturing base from China to India post the general elections, a top US-based advocacy group has said, observing that there is a fantastic opportunity with firms looking at alternatives to the Communist giant.

Innovation Nation: Why Canada should engage the Indo-Pacific as it pushes its innovation agenda
As a country bordering three of the world’s five major oceans, Canada naturally adopts a global outlook in its foreign and economic policies, but it has yet to incorporate recent changes in the trans-Pacific neighbourhood, from the Asia-Pacific to the Indo-Pacific. It is time for Canada to reset its vision.