‘SHOULD INDIA IMPOSE TARIFFS ON THE UNITED STATES OF AMERICA?’
BY AMAN SRIVASTAVA, ARADHANA PANDEY & DAYA NARAYAN
Overview:
On 12th October, The Commerce Society of Shri Ram College of Commerce organized a Round Table Conference for its members on the much-debated topic, ‘Should India impose tariffs on the United States of America?’ The participants represented various stakeholders, namely- The Ministry of External Affairs of India, The World Trade Organization, China, Pakistan, Russia, World Bank, The Ministry of Commerce and Industry of India, The Associated Chambers of Commerce and Industry of India, The Reserve Bank of India and The International Trade Association of The United States of America.
Setting the wheels of the RTC in motion:
The RTC began with the stakeholders giving a brief description of their individual stand and perspective on the issue at hand. While most of them were opposed to the proposal, three stakeholders, namely- China, Russia and the Reserve Bank of India were in favour of India imposing higher tariffs on US goods. Stakeholders who stood strongly against the motion included- WTO, World Bank, Pakistan, the Ministry of External Affairs, the Ministry of Commerce and Industry, ASSOCHAM and the ITA, USA.
Opinion of Indian Stakeholders:
While the Ministry of External Affairs, Ministry of Commerce and Industry and ASSOCHAM were against the imposition of tariffs on the USA, the RBI supported the same. The opposing members mainly argued on the grounds that the said policy’s implementation would harm foreign trade and worsen India’s position at WTO; and on the possibility of worsening relations between the two countries. They were firm on their stand that India, being in a favourable position in their bilateral trade (trade surplus) with the USA, should work on maintaining good relations with the latter, keeping in mind the possible waiver that it might receive from the Countering America’s Adversaries through Sanctions Act (CAATSA) as well as the Indo-Russian deals. They also pointed the out that imposition of tariffs will invite uncalled retaliation from USA that can drive India into a trade war and increase Current Account Deficits, thereby affecting India’s GDP.
However, The Reserve Bank of India, surprisingly against the other Ministries, argued that higher tariffs on US goods can strengthen rupee, and brought the factor of employment in the picture. When the house asked the RBI to justify its assertions, its reply was wobbly. As it failed to provide valid reasoning, its stance was not bought by the other members of the house.
Stands of the Other Nations:
Of the three nations present in the house, namely- China, Russia and Pakistan, only Pakistan was opposed to the imposition of tariffs. Both, China and Russia saw the golden opportunity to get on the same page with India in the global market by supporting the prospective imposition of tariffs, thereby ending USA’s unilateral dominance in the global economy. While China’s statements showed how the Dragon sees Indian markets as a golden land to cash-in, Russia saw this as an opportunity to defeat the purpose of USA. Though the countries refused to acknowledge that their arguments were pointing towards a trade war in near future, their words imply otherwise.
Quenching everyone’s curiosity, Pakistan, the country which has been labelled as ‘China’s puppet nation’ and as ‘India’s Nemesis’, argued against the imposition of tariffs on the grounds of humanity as it held the view that no trade war can be good. Pakistan also implied that India cannot afford to have a stance against the United States at present when India’s geo-political stand in South- East Asia is over-powered by the alliance of China and Pakistan.
Views of the International Organizations:
The two-international institutions present at the RTC- The World Trade Organization and The World Bank, were against the imposition of higher tariffs on US goods by India. In support of its primary objective i.e. promotion of liberal trade and prevention of global trade war, the WTO stood against the tariff imposition and brought into light the benefits of the ‘Most Favoured Nation’ tag given under the umbrella of WTO, which would be lost by India as a consequence of the tariff. The World Bank argued that India, which is currently sitting in a favourable position in the Indo-US trade would only invite retaliation from USA with such tariffs, which may lead to inflationary trends in the fastest developing economy of the world, which would hamper its growth drastically. Both the organizations wholeheartedly supported working out any other alternatives or negotiations for maintaining smooth ties with the US.
Stand of The Nation in Question- The United States of America:
Finally opined in, The International Trade Association of the USA, which, as expected was against the imposition of tariffs on goods produced by their nation. It argued that higher tariffs on US goods would create a trade imbalance, severe Indo-US relations due to retaliations that would thereby lead to the flooding of Indian markets by China. It pointed out how India was struggling to manage the consequences of US’s tariffs which was a retaliation to India’s imposition of 100% tariff on Harley Davidson. It also said that their imposition of tariffs was a ‘Protective method’ aimed at the growth of domestic industries and markets, and definitely not an attempt to curb the growth of the Indian economy. They called Russia and China’s stand on the matter as an act of egoism and as one aimed at over-powering other nations.
The Question & Answer Session:
Then came the question & answer session where members of the International Press and the stakeholders questioned and demanded clarifications from each other. The first stakeholder to be questioned by the house was RBI, which was clearly under-prepared and slimed away with vague answers. China went ahead to respond to the accusation made by the USA, stating that they can’t control the willingness of Indian consumers to buy Chinese products and the subsequent ‘flooding of Indian markets by Chinese goods.’ China was thereafter asked to guarantee its stance of supporting India when Indo-China history surely points out its hypocritical behaviour. China, however, let the question go unanswered. The members of the International Press questioned Pakistan whether its stand was an attempt to receive a green-signal for International Monetary Fund’s assistance, to which it replied by calling its view as one aimed at benefiting India and the world at large. However, it went on to make a controversial remark by calling WTO and India ‘puppets’ of the USA. The USA too, was questioned on its stand against tariffs when USA was the one to start this cycle at the first place. It replied by stating that US has always believed in ‘protectionism’. However, it invited retaliation from the house when it commented about the flooding of US employment markets by Indian job-seekers.
Conclusion
The RTC brought into view the economic, political and personal interests of the various stakeholders. The views of China, Russia and Pakistan lead us to believe in the existence of individual ulterior motives with China and Russia’s stand displaying the want of the two giants to capture Indian markets and set ablaze the downfall of world’s largest superpower, and Pakistan’s stand to remain in the good books of the world at large. The stand of international organizations was diplomatic at large, while the opinion of Indian stakeholders presented their need to protect the country’s economy. USA’s stand was fairly justified but somewhere the question of hypocrisy still persists. In a nutshell, the Round Table Conference was bent in favour of free trade and against any prospective imposition of tariffs by India on United States of America.
The Commerce Society, SRCC 