Barack Obama’s economic agenda of tagging labour and environmental standards with trade is an area of concern for India, but it’s unlikely to impact volume of transaction with world’s largest economy in the near-term, say experts and policy makers.
US President-Elect wants to use trade agreements to spread ‘good labour and environmental standards’. In addition, the election manifesto talked of pressurizing World Trade Organisation (WTO) to enforce trade agreements that will open up markets for US products.
“Both of them (referring to labour and environmental standards) will have adverse implications on India”, said Amit Shovon Roy, chair professor of trade, technology and competitiveness at Indian Council for Research on International Economic Relations (ICRIER).
“India needs to be well prepared as to what strategy it wants to adopt”, he added, saying that he expects labour and environmental issues to be back on the agenda within the next 1-2 years.
The ongoing Doha negotiations within the WTO was allowed to go forward after the labour and environmental standards, which were called as ‘Singapore issues’, were dropped from the agenda. But, it is expected to be brought back by the US, when the current round concludes.
US is India’s largest trading partner and accounts for 17 per cent and 8.36 per cent of exports and imports, respectively in 2008-09. Exports grew by 14 per cent to reach $20.71 billion during last fiscal, while imports grew at nearly 80 per cent at $21 billion.
Meanwhile, reacting to Obama’s election as 44th president of the US, Union Finance Minister P Chidambaram expressed confidence that US-India relations would strengthen in the future.
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“A comment here, a comment there about outsourcing, etc, should not bother us. Once he (Obama) is in office, he will realise that in this inter-connected world, countries have to work together. US as the largest economy and India as the world’s largest free market democracy have to work together. I think we will gain from the new administration," he told reporters on Wednesday morning.
Experts, whom Business Standard contacted, say that there is nothing new in Obama’s economic agenda, as these were part of US trade policy for long time, adding that it had to be looked in the context of current global financial crisis.
"The immediate impact of Obama's agenda on foreign trade could be on sectoral negotiations in the Doha Round of world trade talks,” said Bishwajit Dhar, head of Centre for WTO studies in the Indian Institute of Foreign Trade (IIFT).
He said that the United States could push harder for talks on sectoral negotiations, in which the focus is on completely slashing import duties to zero or close to zero, especially in sectors like chemicals as well as electrical and non-electrical machinery.
FAST ACTION ON ENVIRONMENT IS EXPECTED:
There is near consensus among experts that the US is expected to move fast on environmental standards with Al Gore, former vice president of USA and a staunch supporter of environmental norms, backing Obama.
India is expected to feel the heat only if the US signs the Kyoto protocol - which has set target for reducing greenhouse gas emission on a time bound manner. But, there would be strong opposition from US industries for such a move, said an economist.
However, P K Pachauri, director general of The Energy and Resources Institute, said, Obama’s presidency offers an opportunity for the US to assume leadership in tackling climate change.
"This should please people across the globe, because US leadership is critical for mounting global efforts to meet this threat effectively. For this reason itself, apart from several others, the election of Obama is a development that should generate optimism all-round," said Pachauri, who is also chairman of Intergovernmental Panel on Climate Change.
Obama’s manifesto promises economy-wide-cap-and-trade program to reduce greenhouse gas emissions by 80 per cent by 2050. It also wants to make the US a leader on climate change.
On other issues like promoting US companies that create jobs in the US, Shrawan Nigam, senior consultant with ICRIER, said that WTO allows issues like non tariff barriers to be discussed on bilateral basis. “Issues like non tariff barriers is difficult to be discussed in multilateral negotiations”, he said, who was part of India’s negotiating team to WTO for industrial tariffs.