Will President Trump Clash with India’s Prime Minister on Trade?

June 26, 2017  |  No Comments  |  by Nicole àBeckett  |  Blog

Today, President Donald Trump will meet with India Prime Minister Narendra Modi. Leading up to the meeting, U.S. lawmakers on either side of the aisle have urged the President to press Modi on the removal of barriers to U.S. trade and investment in India (The New York Times). According to these lawmakers, despite the high-level engagement with India, the country has not eliminated major barriers to trade and investment and has not been prevented from imposing new barriers. These barriers include high tariffs, poor protection of intellectual property rights, and inconsistent and non-transparent licensing and regulatory practices.

In a letter to the President, lawmakers claimed that a wide range of sectors from India’s economy remain “highly and unjustifiably” protected, making India a very difficult place for U.S. companies to do business (Reuters). their opinion, the bilateral economic relationship does not perform efficiently due to India’s hesitance in enacting vital market-based reforms.

Major sectors affected are solar and information technology products, telecommunications equipment and biotech products. Further, there are limitations on foreign participation professional services, in addition to numerous restrictive foreign equity caps. The lawmakers’ list of grievances is long and growing.

Currently, Prime Minister Modi is running a “Make in India” campaign as an attempt to boost domestic manufacturing and create jobs (Bloomberg). This may make it difficult for he and the President to reach an agreement, as President Trump’s “America First” agenda creates a clash of economic nationalisms. However, President Trump has called Modi a “true friend” on Twitter, and Modi has expressed excitement in anticipation of the meeting.

For updates on the meeting and information on other relevant trade issues, follow Mercatura Global on Twitter.

If You Are Against Child Labor You Should Support The TPP

January 5, 2017  |  No Comments  |  by Nicole àBeckett  |  Blog

The China-led Regional Comprehensive Economic Partnership (RCEP), the alternative to the US-led Trans-Pacific Partnership (TPP), is moving forward with conviction following Donald Trump’s election win and strong language against free trade. Ultimately, this may save a few manufacturing jobs in the short-term but it does nothing to support industry and job growth for the future and does even more damage to protecting child labor globally.

Asked whether the RCEP negotiations would be more urgent now that President-elect Donald Trump said the United States would not be ratifying the TPP, Malaysia’s International Trade and Industry Minister Mustapa Mohamed said: “You can say that.”

The RCEP, with negotiations expected to conclude later this year, is primarily concerned with streamlining trade rules in Asia Pacific. The 16-member treaty includes ASEAN nations, China, Japan, South Korea, India, Australia and New Zealand and at its core aims to harmonize tariffs and other trade rules.

On the other side, the US led TPP is an ambitious 21st century trade agreement focused on setting high labor and environment standards, strong policies on state-owned enterprises and free competition, and strict rules to allow for a free and open internet and advances proliferation of the digital economy.

The threat to US values if RCEP goes into practice is clear. A China dominated Asia Pacific economy will create a region more reliant on state subsidies to grow industries, eager to maintain decrepit working conditions for powerless workers, allow production practices that continue to destroy the environment, providing low intellectual property protections or internet freedom. These not only go against the values Americans hold dear, they hurt American businesses’ ability to be competitive worldwide – particularly small and medium-sized ones.

From a purely economic analysis, the TPP still comes out on top in economic impact. Asian Development Bank projections indicate that the RCEP provides global income benefits of about $260 billion. Similar studies of the TPP project larger global income benefits of $320 billion to $400 billion.

Retreating from a role in global commerce is harmful to America and harmful to countries that seek to raise the standard of living for their citizens but are at the mercy of trade with a dominant trade partner. Vietnam or Brunei will not enact child labor standards if China doesn’t demand it – that’s an added cost to production they can’t afford.

RCEP will continue even if by some miracle TPP is ratified by the United States Congress. Still it is imperative that the United States remain a driving force in global trade because it will continue to go on, with or without us.

India: 4th Quarter Economic Growth Drives Global Trade

November 18, 2016  |  No Comments  |  by Nicole àBeckett  |  Blog

The WTO World Trade Outlook Indicator expects global trade to pick up slightly in the fourth quarter of 2016, as air freight in particular has shown strong recent growth. These projections positively benefit India, whose exports are starting to recover after they fell from December 2014 until May 2016. Indian outbound shipments grew by over 4% in September to reach $22.9 billion, and global trade improvements are expected to sustain this increase in India during November and December (The Economic Times). 

WTO trade increase projections coincide with a recent announcement from Indian Prime Minister Narendra Modi about the demonetization of the two most valuable notes: 500 and 1000 rupees. Indians will have one year to exchange cash for newly printed notes at banks or to deposit it in their accounts (The Economist).  The new directive addresses the problem of “black money” in India, which includes cash that is unaccounted for and outside the formal financial system. The government will focus on deposits of greater than 250,000 rupees to target “black money” hoarders and force them to present or renounce their savings. As the 500 and 1000 rupee notes represent 86% of all cash in circulation, many cite this change as a path to smartphone apps and card-based payments for the country. India recently introduced the Unified Payments Interface, a system that makes mobile phone payments easier for individuals and businesses, to accompany the shift in currency. 

As India’s economy continues growing, it is now the perfect time to begin investing in India. If you are interested in entering the Indian market and growing your exports, contact us today. 

10th U.S.-India Trade Policy Forum Occurring Today in New Delhi

October 20, 2016  |  No Comments  |  by Nicole àBeckett  |  Blog

India’s Commerce and Industry Minister Nirmala Sitharaman and U.S. Trade Representative Michael Froman will meet today during the 10th trade policy forum (TPF). As the premier bilateral forum for discussion between India and the US, important topics of discussion include agriculture, investment, innovation and creativity, services, and tariff/non-tariff barriers (The Business Standard). Current bilateral trade between the two countries is around $100 billion, yet both sides have expressed the goal of raising that number to around $500 billion in coming years.

The purpose of the forum is to understand the best practices for bilateral trade, facilitate increased investment, and raise any concerns either side might happen. Froman claims that trade with India is “a work in progress,” and he believes the upcoming TPF will smooth over some of the restrictive issues to better the business environment and improve their trade relationship (The Economic Times). Intellectual property rights issues are of particular importance.

Past TPFs have resulted in the resolutions of multiple issues regarding services, manufacturing, and IPR. From 2015-2016, there was an overall increase in bilateral trade of goods and services and the highest ever level of foreign direct investment inflow. The TPF taking place today hopes to continue this trend, and the there is no better time to begin considering your export opportunities to India..  If you are interested in learning more about how to start this process, contact Mercatura Global today.

Trade Experts Share Thoughts on TPP Future

January 15, 2014  |  No Comments  |  by Nicole àBeckett  |  Blog

“Why not China? Why not Korea? Why not Taiwan?”

These were the words of former United States Trade Representative Mickey Kantor on Tuesday at the US-Australia Bilateral Dialogues when asked if the Trans Pacific Partnership (TPP) was just a starting point for a broader agreement that would open trade to the entire Asia-Pacific region. While that may still be far off, there is a sense of urgency to get this agreement completed in 2014.

The TPP is a massive trade agreement between Australia, Brunei, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. Called a 21st century trade agreement, the TPP intends to move beyond policies of the traditional free trade agreements (tariff reductions, market access) and instead looks to harmonize digital property protections, promoting innovation, and environmental alignments among other regulations.

Kantor warned that the agreement, in its current state without China, was serving to alienate the country even further and would not advance an agenda of pushing China to enter into fair trade and transparent currency regulations.

Claude Barfield, a Resident Scholar at the American Enterprise Institute and former consultant to the US Trade Representative, opined that the agreement should be enacted with its current partners but should also be an ongoing and open agreement that allows further countries such as China, India, Indonesia to join down the road when they have demonstrated they meet the expectations of the pact. He also warned that missing the December 2013 completion deadline was a blow to the partnership and warned that President Obama must line up Democratic support now in order to get it across the finish line.

The two points that all panelists agreed on was that, first, completing the agreement this year is critical if it is to be completed at all. And second, that policymakers and the general public should look at this agreement not as a forthcoming hit to domestic industries but rather in the context of how it will make our economies more competitive, more innovative and revitalize the global economy.

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