Purina vs. Amal: The US, India and APEC
Manohar Thyagaraj dissects the US-India relationship and argues it must not be allowed to be defined by disagreements over milk products and pet food.
Almost three months into the second Obama Administration, what can be said about the prognosis for the US-India strategic relationship for the next few years? As policymakers in both countries search for its guiding motifs beyond the high-level rationales of common values and shared interests, it's become the settled view across multiple constituencies in Washington that the search for the next US-India cause célèbre, or the next big thing, is unnecessary.
'Routinization' is the word of currency, rather than ambition. What is perceived as the sheer difficulty -- within Washington itself, let alone with Delhi -- of major initiatives on India has created an environment where, for the bureaucracy, small steps are preferred to large ones.
While broad acceptance of the necessity of a robust India relationship is obvious -- the fact that comments attributed to Chuck Hagel became a late factor in his confirmation process should signal India's importance -- communication between mid-levels of the bureaucracies in Washington and Delhi remains sketchy. And sometimes contentious within Washington's own interagency process.
Instead of a modus operandi, the US-India strategic relationship has settled at a modus vivendi. Without consistent mid-level communication, a relation-ship with a destination, but a dodgy rudder, continues to snake its way erratically across the geopolitical seas.
The defense relationship is growing in a measured, yet, halting, fashion. India has agreed to procure more than $8b of US defense equipment since 2008. Joint exercises are continuing. As the US continues its learning process on India, and vice versa, communication gaps and misunderstandings between each country's defense management systems are likely to be plugged.
While the US and India thus grow closer together in many ways on the 'strategic' front, there is an ironic divergence from this theme in how they view each other on the trade front. What should be two sides of the same coin are essentially functioning in parallel, not tandem.
Disagreements about bilateral trade issues, such as the sale of pet food and milk products to India and frequent head-butting at the WTO have bred a legion of US trade officials who view India not as an ally, but a pseudo-adversary.
While some disagreements about trade are to be expected between even the closest partners, the points of contention between India and the US come from gut-level differences of opinion that are harder to resolve, as each government has to meet their disparate political compulsions.
Yet, any slump in India's economic performance, as currently is the case, has clear ramifications in the US. Despite the differences between them, the US is India's top trading partner in both goods and services. In its Global Trends 2030 study of 2012, the National Intelligence Council suggested that India will be the world's largest driver of middle class growth by 2030. The converse of this argument is that, if things don't go right, India could be the biggest contributor to a global middle class slump by 2030.
India maintaining its GDP growth rate is good for both India and the US, as it means continued job and income growth in India, and boosts India's market potential for US goods and services. Trade with India, it can be argued, has both strategic and commercial dimensions for the US.
What if there were a US-India initiative which satisfied all these compulsions at once: could contribute to raising India's GDP growth, could contribute to boosting US exports to India, including that of defense equipment, could boost India's overall exports and could speak directly to the Obama Administration's Asian 'rebalance', without being accused of putting India in the US 'camp'? There is. The US could support India becoming a member of APEC (Asia-Pacific Economic Cooperation).
The twenty-one APEC economies account for about 44% of global trade, and have a per capita income of around $31,000. APEC membership for India would thus permit easier access to a large and rich potential market, including the biggest economies in Asia, North America, Latin America, and even Russia. Indian businesses would be able to directly interact with major APEC working groups in order to boost India's economic participation in the Asia-Pacific.
APEC membership is also a pre-requisite for membership to the huge Trans-Pacific Partnership (TPP) free trade agreement (FTA). While an FTA with the US remains a remote prospect, India could eventually be a part of a free trade multilateral that includes the US, creating a theater where India's 'Look East' meets the US Asian 'rebalance'. Economic liberalization in the name of free trade, where necessary, would occur under a multilateral rubric.
If India is interested in membership in APEC -- and it has reportedly signaled that it is ready -- then it must realize that not only is US support essential, but the major roadblock for India's membership in APEC is also the US. Major stakeholders in this process such as the office of the US Trade Representative (USTR), will by default work on different imperatives than the overarching strategic themes that propel the State Department calculus.
In the transactional paradigm that underwrites trade discussions, for the US, support for APEC membership is a huge carrot to offer India. It will probably not be had without some measurable reciprocity. For India, the age of relying on US largesse with major policy initiatives -- the type that requires broad consensus within Washington -- is over.
At a transactional level, there isn't a lot of sentiment to do India any favors at the moment. If India wants US support in the near-term to get into APEC, it has to go get it, by putting something on the table -- acceptable within India -- that the USTR will be interested in as a policy 'win'.
The process of the US enabling India's membership in APEC is thus a two-way street. The US has to decide if it wants its India trade relationship to be defined by the ability to sell pet food.
India must decide if it wants its US trade relationship to be defined by the ability to resist American milk products. If Purina vs. Amul is the headlining fight, is the barometer on which it is measured, then the trade relationship's contribution to the overall strategic relationship would be akin to that of the master showman and hoaxist PT Barnum to reality.
On the other hand, a US move to support India's membership of APEC, a process in which India could help itself, would show ambition in the broader strategic relationship and help it move from a modus vivendi to a modus operandi.
The writer is a Visiting Fellow at Observer Research Foundation, New Delhi.
