India, US headed for a trade war: Foreign Policy

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Arun Kumar | 10 Feb, 2015
The growing "chumminess" between India and the US may soon give way to a trade war as simmering disputes between them retake centre stage, Foreign Policy magazine has suggested.

President Barack Obama's India visit last month and Indian Prime Minister Narendra Modi's visit to Washington last September "suggested a growing camaraderie between the nations," it said in a commentary Monday.

"But look past the veneer of chumminess, and you'll see that the era of good feelings is likely to be short-lived, as simmering disputes between Washington and New Delhi retake their place at centre stage," it said.

"Among the most important are likely to be their vastly differing trade priorities, as each competes for a piece of the world market and plays a high-stakes game to ensure that its businesses and workers get a larger share of the pie," Foreign Policy said.

Among the key sticking points is a trade disagreement over India's domestic procurement requirements for solar cells and modules and their positions on intellectual property protection (IPP).

While "large, deep-pocketed American pharmaceutical companies with powerful lobbies in Washington want India to strengthen its regulatory regime," Foreign Policy said Indian generics manufacturers "fear that they will lose much of their business if India adopts US-style patent protection."

The IPP issue resides at the heart of the proposed Trans Pacific Partnership (TPP), a free trade agreement among 12 nations in the Asia Pacific accounting for 40 percent of world gross domestic product and one-third of world trade.

Both China and India are currently outside the TPP.

Intellectual property regulations would be at the core of the TPP's potential negative impacts on India, Foreign Policy said.

"The TPP also includes a host of stringent labour and environment standards that India - and, for that matter, most emerging economies - would fail to meet," it said.

"There's no indication that the Modi government has any plans to cave on these standards, the adoption of which would seriously erode India's competitiveness, anymore than it has shown any inclination to cave on climate change - yet another area where India and the United States remain at logger heads," Foreign Policy said.

"It's very hard to see how the new-found friendship between Obama and Modi can resolve these tensions," it said.