Indo-US trade deal is not just about trade

The deal shifts the US posture towards India from hostile to neutral, and that matters for growth

- T T RAM MOHAN

The India-United States (US) trade deal, for which a framework for an interim agreement has been agreed, will not lack critics. The Congress party has called it a surrender. A farmers’ organisation has called for protests. Many will pore over the fine print once the details are finalised and argue that the deal is more favourable to the US.

We need to be clear about a couple of things. First, any nation negotiating a trade deal with the Trump administration must expect the deal to be tipped in favour of the US. President Donald Trump has made it clear that his priority is to reset America’s economic equations with the rest of the world. He is determined to use the economic and military might of the US to do so.

For the entire post-War period until recently, the US was happy to let the advantage lie with many of its trade partners. It believed that it was economically strong enough to do so. Sharing prosperity with partners, the US believed, would make for world peace and it would also keep the world safe from communism.

Not anymore. Mr Trump rode to power in 2016 by insisting that the time had come to reorder trade relationships to the benefit of the US. He didn’t quite manage to do so, partly because his initiatives were scuttled by Washington establishment status-quoists in his Cabinet. In his second term, Mr Trump is determined not to make that mistake. He has filled his administration with loyalists who will faithfully execute his orders.

Last July, Mr Trump reiterated his perception of where matters stand. He said in a post, “The United States of America has been ripped off on TRADE (and MILITARY!) by friend and foe alike, for DECADES. It has come at a cost of TRILLIONS OF DOLLARS, and it is just not sustainable any longer — And never was!” In any trade deal, therefore, it will be Advantage US.