Part of: GS-Prelims and GS-II – International Relations
In News:
The US Supreme Court ruled that the federal law that prohibits discrimination based on sex should be interpreted to include sexual orientation and gender identity.
Key takeaways
The country’s SC decided that gay and transgender people are protected under Title VII of the Civil Rights Act of 1964.
The title prohibits employment discrimination based on race, colour, religion, sex and national origin.
Essentially, with this landmark ruling, the SC has said that Title VII’s provision, which says that employers cannot discriminate on the basis of sex, includes LGBTQ employees.
The ruling involved three cases filed by employees who claimed they were fired from their jobs because of their sexual orientation.
The landmark ruling represented the biggest moment for LGBT (lesbians, gays, bisexual, transgender) rights in the United States since the Supreme Court legalized same-sex marriage nationwide in 2015.
The Sports Ministry is all set to establish Khelo India State Centres of Excellence (KISCE) under the ministry’s flagship, Khelo India Scheme to enhance India’s Olympic performance.
Key takeaways
One KISCE will be identified in each state and union territory, with an effort to create a robust sporting ecosystem in the entire country.
In the first leg, the Ministry has identified state-owned sports facilities in eight states of India:
Karnataka
Odisha
Kerala
Telangana
Arunachal Pradesh
Manipur
Mizoram
Nagaland
The States will run the centres and build capacity to turn them into the world-class sporting facilities.
They will be responsible for all aspects of management of the centre.
Funds for expert coaches, supporting staff, equipments, infrastructure will be extended through the Khelo India Scheme.
Important value additions
The Khelo India programme
It has been introduced to revive the sports culture in India at the grass-root level by building a strong framework for all sports played in our country and establish India as a great sporting nation.
Talented players identified in priority sports disciplines at various levels by the High-Powered Committee will be provided annual financial assistance of INR 5 lakh per annum for 8 years.
The National Centre for Polar and Ocean Research (NCPOR) has predicted an increase in the expansion of Amery Ice Shelf (AIS) boundaries from its 2016 positions.
The AIS is one of the largest glacier drainage basins in the world, located on the east coast of Antarctica.
The AIS dynamics and mass balance help in understanding the changes in the global climate scenario.
The prediction made by NCPOR is expected to help to understand the ongoing changes in the ocean and atmospheric forces better.
Key takeaways
The predictions are based on a 16-year-long satellite-based observation that covered an area of 60,000 sq. km across the AIS.
It has been predicted that there would be a 24% increase in the expansion of AIS boundaries by 2021 and another 24% expansion by 2026from its 2016 positions
The study has also observed a spatio-temporal (belonging to both space and time) change in the ice shelf as reflected by the extension of the Prydz, Mackenzie and the Sandefjord Bays which forms a part of the AIS.
In the background of the global warming scenario, the study reveals about the advancement in the predicted ice shelf extent, the future dynamism of ocean heat fluctuation.
The study has also observed that the critical cooling of the Sea Surface Temperature (SST) is resulting in an advancement of the ice shelf by 88% in the past 15 years.
These changes would contribute in a major way to climate variability.
Important value additions
Ice Shelves
The floating sheets of ice are called ‘ice shelves’.
It plays a major role in maintaining the stability of a glacier.
Ice shelves connect a glacier to the landmass.
Important parameters for the balancing of a glacier:
Ice sheet mass balance
Sea stratification
Bottom water formation
The ice sheet mass balance – Net balance between the mass gained by snow deposition and the loss of mass by melting.
Sea stratification – When water masses with different properties form layers that act as barriers to water mixing.
The deep-ocean bottom water is formed by the cooling and sinking of surface water at high latitudes.
Part of: GS-Prelims and GS-II – International Relations & GS-III – Trade; Intellectual Property
In News:
Recently, the office of the United States Trade Representative (USTR) has initiated investigations into taxes adopted or under consideration by 10 nations, including India.
These nations had charged taxes on revenues of American digital service companies like Netflix, Airbnb, Spotify, etc.
Such taxes are known as Digital Service Taxes.
Key takeaways
The US is probing the 2% Digital Services Tax (DST) that India adopted in March and which went into effect on April 1, 2020.
The tax applies only to non-resident companies with annual revenues over $267,000, and covers online sales of goods & services to persons in India.
Further, equalisation levy at 6% has been in force since 2016 on payment exceeding Rs. 1 lakh a year to a non-resident service provider for online advertisements.
This is applicable for e-commerce companies that are sourcing revenue from Indian customers without having significant presence in the particular country.
It is argued that India’s equalisation levy is complex and ambiguous which includes the possibility of double taxation.
In India’s case, the probe could potentially affect the outcome of a bilateral trade deal that India has been looking to forge with the US.
Further, India continues to be on the ‘Priority Watch List’ of USTR for lack of adequate Intellectual Property (IP) rights protection and enforcement.
Important value additions
The Office of the United States Trade Representative (USTR)
It is responsible for developing and coordinatingUS international trade.
The Section 301 gives the USTR broad authority to investigate and respond to a foreign country’s actions which may be unfair or discriminatory and may negatively affect US commerce.
Section 301 was adopted through the 1974 Trade Act.
It allows the US President to impose tariffs or other curbs on foreign nations.
However, the law mandates consultations with trading partners.
Digital Services Taxes (DSTs)
These are the adopted taxes on revenues that certain companies generate from providing certain digital services.
E.g. digital multinationals like Google, Amazon and Apple etc.
The Organisation for Economic Cooperation and Development (OECD) is currently hosting negotiations with over 130 countries that aim to adapt the international tax system.
One goal is to address the tax challenges of the digitalization of the economy.
(MAINS FOCUS)
INTERNATIONAL/ SECURITY
Topic: General Studies 2,3:
India and its neighborhood- relations
Security challenges and their management in border areas
Context: The Indian government has tried to respond to the border dispute with China by targeting the trade ties between the two countries.
For background information of the ongoing tension, click here and here.
The idea resonating among the common public is that Indians should boycott Chinese goods to teach China a lesson.
While one can understand the outrage that Indians feel when they hear about the brutal deaths of their soldiers, turning a border or defence dispute into a trade one is an ill-advised move.
Let us look at the reasons as to why such a move is not favorable to India:
Trade deficits are not necessarily bad
One of the main reasons why banning trade has been the first reaction is the notion that having a trade deficit is somehow a “bad” thing.
However this is not true.
Trade deficits/surpluses are just accounting exercises and having a trade deficit against a country doesn’t make the domestic economy weaker or worse off.
For instance, India has a trade surplus with the US, the UK and the Netherlands.
But the Indian economy is still not stronger or better off than any of these three.
Similarly, it has a trade deficit with many other countries such as China, South Africa, UAE, Russia, South Korea, etc.
Yet, a trade deficit doesn’t necessarily mean that the Indian economy is worse off than South Africa’s.
A trade deficit with China only means that Indians buy more Chinese products than what Chinese from India.
Essentially, it shows that Indian consumers and the Chinese producers, gained through trading. Both sides are better off than what they would have been without trade.
At one level, no country is self-sufficient.
It allows countries to specialise in what they can do most efficiently and export that good while importing whatever some other country does more efficiently.
So while a persistent trade deficit pushes the domestic government to improve policies and create the infrastructure to raise competitiveness, it should not force people to move away from trade because doing so will undermine efficiency and will affect consumer’s benefits.
Trade ban will hurt the Indian poor the most
Most of the times, the poorest consumers are the worst-hit in a trade ban because they are the most price-sensitive.
For instance, if Chinese ACs were replaced by either costlier Japanese ACs or less efficient Indian ones, richer Indians may still be able to buy the costlier option.
But, a number of poor, who could have otherwise afforded an AC, would either not buy one because it is now too costly or suffer by buying a less efficient Indian one.
Similarly, by banning sale or avoiding chinese products which are already in India, Indian retailers will be affected.
This harm would be proportionately more on the poorest retailers because of their relative inability to cope with the unexpected losses.
It will punish Indian producers and exporters
It is true that trading hurts only the less efficient Indian producers while helping the more efficient Indian producers and businesses.
However, several Indian businesses import intermediate goods and raw materials which are used to create final goods — both for the domestic Indian market as well as the global market.
An overwhelming proportion of Chinese imports are in the form of intermediate goods such as electrical machinery, nuclear reactors, optical and photographic measuring equipment, etc.
Such imports are used to produce final goods which are then either sold in India or exported.
A blanket ban on Chinese imports will hurt all these businesses at a time when they are already struggling to survive.
It will barely hurt China
The trade ban will hurt India and Indians far more than it will hurt China.
China accounts for 5% of India’s exports and 14% of India’s imports.
China’s exports to India are just 3% of its total exports.
China’s imports from India are less than 1% of its total imports.
Due to the ban, India will lose 5% of its exports and 14% of its imports.
On the whole, it is much easier for China to replace India than for India to replace China.
India will lose policy credibility
It has also been suggested that India should pull out of existing contracts with China.
Again, while in the short-term this may assuage hurt sentiments, it would be hugely detrimental for India which has been trying to attract foreign investment.
One of the first things a foreign investor tracks is the policy credibility and certainty.
If policies can be changed overnight, if taxes can be slapped with retrospective effect, or if the government itself pulls out of contracts, no investor will invest. Or, if they do, they will demand higher returns for the increased risk.
Raising tariffs is mutually assured destruction
It has also been argued that India should just slap higher import duties on Chinese goods.
Others have suggested that India can allow primary and intermediate goods from China at zero duty, but apply prohibitive tariffs on final goods.
India would be violating the rules of the World Trade Organization.
This is a poor strategy since others can and most likely will reciprocate in the same way.
What will also go against India here is its relatively insignificant presence in global trade and value chains.
In other words, it is relatively easy for the world to bypass India and carry on trading if India doesn’t play by the rules.
Conclusion
The first thing to understand is that turning a border dispute into a trade war is unlikely to solve the border dispute.
Given India and China’s position in both global trade as well as relative to each other, this trade war will hurt India far more than China.
Banning all trade with China will be most poorly timed since the Indian economy is already at its weakest point ever facing a sharp GDP contraction.
The ban will come at the cost of Indian domestic consumers.
Way forward
India now has an insignificant share in world trade.
India must try to aggressively acquire a higher share of global trade by raising its competitiveness.
(TEST YOUR KNOWLEDGE)
Model questions: (You can now post your answers in comment section)
Note:
Correct answers of today’s questions will be provided in next day’s DNA section. Kindly refer to it and update your answers.
Comments Up-voted by IASbaba are also the “correct answers”.
Q.1 Consider the following statements regarding Khelo India scheme:
This scheme is applicable only to the sports persons who have qualified for Olympics
Talented players are provided annual financial assistance of 5 lakh per year for 8 years.
Which of the above is/are correct?
1 only
2 only
Both 1 and 2
Neither 1 nor 2
Q.2 Consider the following statements regarding Amery ice shelf:
It is one of the largest Glacier drainage basins of the world located in Arctic.
Recently, the scientists have predicted increase in its expansion boundaries from 2010 positions.
Which of the above is/are correct?
1 only
2 only
Both 1 and 2
Neither 1 nor 2
Q.3 Consider the following statements:
Section 301 gives United States Trade Representative (USTR) authority to investigate foreign country’s actions which negatively affect US commerce.
India is included in the Priority Watch List of USTR.
Which of the above is/are correct?
1 only
2 only
Both 1 and 2
Neither 1 nor 2
ANSWERS FOR 19th June 2020 TEST YOUR KNOWLEDGE (TYK)
