CUTS Washington Monthly Brief
#19, October 2019
Talks remain the best means to end U.S. China trade wars
Sino-U.S. trade wars seem to be coming to an end. It is expected as President Donald Trump on 11 October announced that the U.S. and China are prepared to sign an interim agreement. It will not only mark the end of the endless trade wars but also lay the foundation to reach the final deal. It was until recently staged to be signed at the Asia-Pacific Economic Cooperation Summit on 16-17 November in Chile. However, the two Presidents will now have to look for another opportunity as Chile has cancelled APEC and Climate summits amid mass civilian protests over a biased political and economic system that favours the rich.

The main beneficiaries of the interim or the phase-1 of the U.S.-China trade deal will be the American farmers and financial services providers. It is also coincided with China enabling imports of U.S. soybeans of 264,000 tonnes. Such respite for farmers was particularly needed as they had heavily voted for President Trump in 2016. 

It is a known fact that President Trump’s efforts of reducing U.S. trade deficit with China by restricting Chinese imports since early 2018 proved to be counterproductive. The trade wars had, in fact, worsened the deficit. For example, the U.S. goods trade deficit with China which was around US$375bn worth in 2017 rose to US$419bn, at the end of 2018. At the end of 2019, President Trump may show some success but how tangible it will be, that remains to be seen.

Nonetheless, the approach of signing a partial agreement first with continued negotiations to reach the final deal is a wise move as President Trump is slated to face presidential polls next year. Furthermore, it will only help him incredibly if he continues to make China reciprocate through negotiations while avoiding the ‘tit for tat’ battle.
Pradeep S. Mehta

P. S. CUTS International organised a U.S.-India Innovation Roundtable in partnership with U.S.-India Strategic Partnership Forum on 30th October in Washington DC. The roundtable hosted Harsh Vardhan Shringla, Indian Ambassador to the United States, among other eminent speakers from both the countries. It discussed the role of innovation in realising the potential of mutual partnerships in Defence & Aerospace, Energy and Data & Technology sectors, among others. The report of the event will follow soon. A mirror roundtable will be organised in New Delhi on 3rd December. 

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Have the building blocks been put in place for an Indo-US Pact on Bilateral Trade?
With $142 billion and rapidly growing bilateral trade, expectations about a bilateral trade pact between the US and India have been soaring high.  Despite this, a deal could not be signed late September due to several differences. This is not to say that commerce minister Piyush Goyal and US trade representative Robert Lighthizer did not try to resolve these differences to strike even a minimalistic trade deal – in fact they did.
New U.S. Bill in Senate for more Green Cards
U.S. senators Dick Durbin and Patrick Leahy introduced the Resolving Extended Limbo for Immigrant Employees and Families (RELIEF) Act in the state senate to address stalled immigration issues.

How Keeping Score can End the Era of Short-Termism
As finance ministers gathered in Washington, DC, for the World Bank and International Monetary Fund’s annual meetings, they faced no shortage of urgent matters to discuss. Fears of a global recession, the U.S.-China trade war, the fallout of the Brexit talks, and a dangerous debt overhang make this the most stressful economic juncture in a decade.

What does a Slowing Chinese Economy mean for the World?
China is a key driver of global growth and its slowing economy has an impact on other countries too. Data showed that a slide in China's exports accelerated in September while imports contracted for a fifth straight month. As China slows, it is buying less from the rest of the world and that is affecting its trade partners.


U.S.’s Oil Partnership with India is becoming Stronger
India’s energy agreement with the U.S. is likely to jump by over 40 percent to US$10bn in 2019-20, as the world’s third-largest oil consumer looks to move away from its usual suppliers in the Middle East, Oil Minister Dharmendra Pradhan stated on both the requirement and the opportunity for the two nations to lift two way energy ties to a new level.
Europe’s Natural Gas Glut Turns LNG Tankers Toward Asia
Multiple liquefied natural gas cargoes that were due to arrive in the region have been cancelled due to a lack of space in storage terminals, according to trader’s familiar with the situation. That means some gas sellers would not be able to benefit from the usual seasonal price increase and instead must seek other customers, which may be a boon for buyers in Asia.
India to Spend US$100bn on Energy Infra
India will invest a massive US$100bn in oil and gas infrastructure to meet energy needs of an economy that is being targeted to nearly double in five years, Prime Minister Narendra Modi said as he sought investment from oil kingpin Saudi Arabia and other nations to boost supplies.

Energy Security after Abandoning the Kurds and Killing Baghdadi
Let someone else fight over this long blood-stained sand.” So said President Donald Trump after pulling U.S. troops out of northern Syria. His announcement gave Turkey the green light to cross the Syrian border and to storm Kurdish towns. The Turkish onslaught continued for weeks, creating over 300,000 refugees almost overnight.


Pentagon Draws up Plans for withdrawal of U.S. Troops from Afghanistan
Trump has long threatened to withdraw all American forces from Afghanistan, but his repeated emphasis on the need to end all foreign wars has infused a new sense of urgency into the renewed Pentagon effort, officials said.
The U.S.-India-China ‘Strategic Triangle’
As the Narendra Modi-led National Democratic Alliance government settles in its second term with a plethora of foreign policy challenges looming large, it faces unusual headwinds from what should be a “natural partner” – the U.S. – on both economic and strategic fronts

India-U.S. Plan to Revitalise Defence Tech Sharing Pact
India and the U.S. are planning to revitalise a defence technology sharing pact by putting several new ideas on the table, including a focus on startups, the possibility of exports to identified third nations and focusing on practical industry partnerships. The India-U.S. Defence Technology and Trade Initiative (DTTI) signed in 2012 was aimed at identifying and promoting major joint development and manufacturing projects for the defence forces but has not yielded any major results.
A New Platform for Deepening Economic Ties
The Indonesia-Australia Comprehensive Partnership Agreement (IA-CEPA) is a major strategic effort to build a bilateral economic partnership. Australia and Indonesia signed the free trade agreement in March 2019 after 11 years of consultation and negotiation. Australian Parliament’s Joint Standing Committee on Treaties (JSCOT) has recommended that Parliament ratify the trade agreement as soon as possible in a report they tabled recently.


Washington gives Chinese Diplomats a Taste of their own Medicine
For years, the Chinese government has become accustomed to doing things in our country that it does not let us do in its. But those days may now be coming to an end. The Trump administration is focusing on the concept of ‘reciprocity’ to pressure China to compete fairly or suffer consequences.

Income Inequality Highest in more than 50 Years
Income inequality in the U.S. is at its highest point since data started being collected more than 50 years ago, according to Census Bureau numbers. The Gini index that measures income inequality grew significantly from 0.482 in 2017 to 0.485 in 2018. The scale ranges from zero, exemplifying perfect equality, to one, if one household received all of the income.
Asia’s Remarkable Economic Transformation
For Asian countries, political independence, which restored their economic autonomy and enabled them to pursue their national development objectives, motivated and drove this transformation. And, unlike Latin America and Africa, most Asian countries did have a long history of well-structured states and cultures, which were not entirely destroyed by colonialism.
Modi-Xi Chennai Connect and India-China Relations
Prime Minister Narendra Modi and President Xi Jinping met on an informal summit on October 11-12, 2019 at Mamallapuram, a coastal town near Chennai, which was a port from where trade between the two nations was carried out two thousand years ago. They both spoke on national visions, trade-related issues and investment opportunities.