GS-2: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.
India-USA: Trade and Climate
In News: As 2021 closes, with COVID-19 still a present danger and China emerging as superpower on the global stage, India and the U.S. as strategic partners have a long way to go.
US & India: Trade & Climate
The U.S. Special Presidential Envoy for Climate, John Kerry, has visited India twice already, and India and the U.S. are collaborating under the Climate and Clean Energy Agenda Partnership.
Both countries are also taking leading roles in Climate Change, articulating their climate concerns and commitments.
If India and the U.S., coordinate policies to incentivise sharing of climate-related technologies and align approaches for reducing emissions associated with trade, the climate-trade inter-relationship can be a net positive one.
Concerns
While India just announced a net zero goal for 2070, it has called for western countries – like USA- to commit to negative emissions targets. This might create troubles in bilateral relationship.
India’s insistence on climate justice & adequate carbon space for itself, is likely to be received poorly by U.S. negotiators.
Likewise, the failure of the U.S. and India to articulate a shared vision for a comprehensive trade relationship (failure to sign FTA) raises doubts about how serious they are about expanding their relationships.
Protectionist tendencies in both countries can create hurdles in deepening of economic relationships.
India insistence on technology transfer for climate mitigation that can undermine incentives for innovation in both countries can create troubles in forging enhanced trade & climate partnership between two countries.
If the U.S. decides that imports from India be subject to increased tariffs in the form of carbon border adjustment mechanisms, it can hurt the future trade prospects between both the countries.
Way Ahead
India and the U.S. could find opportunities to align their climate and trade approaches better, starting with a resolution of their disputes in the World Trade Organization (WTO) on solar panels.
The two countries could also chart a path that allows trade to flow for transitional energy sources, such as fuel ethanol.
Concerted action on both the climate and trade fronts is mutually beneficial and will lend additional strength to the foundation of a true partnership for the coming century.
