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Whither WTO?

The trade war between the US and China has escalated in the last few days. There is little hope of a resolution of the crisis. Trade war is symptomatic of a larger strategic confrontation. As a result of the trade war initiated by President Donald Trump, WTO faces collateral damage. The multilateral body is on its last legs. Neither the US nor China is prepared to listen to it. An emerging market like India can only wait and watch in such a situation. But it must be flexible and quick to seize opportunities. At the same time it should beef up its own economy.

India’s merchandise exporters had a tough time in the last four years. Their competitiveness has suffered. Domestic reforms should be speeded up to tide over the crisis. A more integrated approach is necessary. The trade war between the US and China provides India with opportunities not existing a few months ago. US and EU companies with a long manufacturing wage in China can shift to India to get over the risk game for the benefit has gone to Vietnam and other South East Asian countries which have been quicker at the exercise. True, China’s selective escalation of tariffs provides opportunities for Indian businesses. The emphasis should be on how to be the first to grab them. Long-term competitiveness should simultaneously not be lost sight of. A logistics plan has to be put in operation. Logistics costs should be lowered to 10% of GDP from the current level of 14%. There should now be a scramble for exploiting the opportunities which come up. India should not lag behind. However what is worrisome for India is the annual Special 301 report which identifies trade barriers to US companies due to intellectual property laws of other countries. Ironically, India happens to be among those countries which have serious intellectual property rights deficiencies and do not give adequate protection to American  firms.

In a 2017 report on trade with India, the US had cited at the absence of sufficient measurable improvements to India’s IP framework on old challenges and new issues that have negatively affected US right holders, particularly with respect to patents, copyrights, trade secrets and enforcement. The Report says this puts US trade secrets at unnecessary risk. India has to sort out these issues if it is to take advantage of the US-China tug of war on trade.


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