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Admin 2019-08-16

16th Aug 2019: The Hindu Editorial Analysis

1) Trade rhetoric: On U.S.’s WTO pullout threat

  • U.S. President Donald Trump opened up another front in the ongoing global trade war on Wednesday by ramping up (behaving) rhetoric against the World Trade Organization (WTO). He even threatened to pull the U.S. out of the multilateral trade organization if it fails to treat the U.S. fairly and blamed it for allowing too many countries to claim the status of a “developing country”. 
  • In a memo to the U.S. Trade Representative last month, Mr. Trump pointed out that nearly two-thirds of the 164 WTO members classified themselves as developing countries, and raised the issue of even many rich economies claiming to be “growing” rather than “grown” economies. This time around, in Pennsylvania, the President targeted India and China in particular for “taking advantage” of the U.S. by classifying themselves as “developing countries” at the WTO. 

  • The status of a developing country allows countries to seek partial exemptions from the WTO’s rules for free and fair trade between countries. The status, for instance, allows countries like China and India, with their special tag, to impose higher tariffs on imports from other countries and also offer more subsidies to local producers in order to protect their domestic interests. 
  • Developed countries find this to be unfair on their producers who are put at a relative disadvantage, but countries like China have argued that their developing country status is justified given their low per capita income. Mr. Trump’s recent attacks on the WTO would be welcome if they were truly about creating a global trading arena with lower tariffs and fewer barriers to trade. 
  • The “developing country” status, which offers substantial benefits to countries that want to protect their domestic interests and which most countries are more than happy to make use of, has indeed skewed (inclined) global trade over the years in favor of certain countries. But he (Mr. Trump) may be raking (gathering) up to the issue not to further the cause of (promoting the growth of) global free trade, but simply as a convenient pretext to justify (a fictitious reason to conceal the real reason) further trade barriers against China and other countries
  • By pointing fingers at other countries that follow protectionist policies, Mr. Trump will find it justified to impose retaliatory tariffs against them. This will help him bolster (support and strengthen) his “America First” approach and allow him to successfully hold on to his support base in America’s manufacturing belt that has been affected by foreign competition. 
  • Even if countries like China and India offer to lower their tariffs, Mr. Trump would not take them up on their offer. That is because it would require reciprocation in the way of (in return) lowering U.S. tariffs, which would work against the interests of local American producers.


2) Words and deeds: On Modi’s Independence Day vision

  • Prime Minister Narendra Modi in his Independence Day speech combined the familiar rhetoric with some fresh thoughts. He spoke at some length about the need for population control, water conservation and plastic use regulation indicating the importance that he attaches to these topics. 
  • Some policy measures, including the creation of a separate ministry, are already in place to deal with the crippling water crisis in India which gets worse every year. Indiscriminate plastic use along with the absence of effective solid waste management has already caused such ruin to the ecology that mitigatory measures are required on a war-footing. 
  • He also made the significant announcement of creating the position of Chief of Defence Staff, which could improve coordination among forces and restructure the military-civilian relations in a manner that suits the security challenges of the present times better. 
  • His call for people’s participation in all these and also for the development of tourism and local enterprises were in the right spirit. The appeal to produce locally and consume locally may be out of line with globalist prescriptions of development but should be welcomed even if it sounds impractical. 
  • His first tenure between 2014 and 2019 focused on the needs of the people while the second one which began this year, he promised, would focus on meeting aspirations. Mr. Modi said his government has achieved in 70 days what previous governments could not in 70 years. 
  • He struck an optimistic note and said poverty can be eliminated and shall be eliminated. As it enters the 73rd year as an independent nation, India needs hope and optimism, now more than at any moment in its recent past. The triumphalist (Proud in one's belief or culture) overtones of the speech, however, sought to camouflage (hide) the gathering clouds of a crisis in the economy on the one hand and the threats to the country’s social fabric on the other. 
  • Going by the trajectory the Indian economy has followed in the past, it could well be on the way to be a $5-trillion economy in the next five years. But he chose not to adequately address the current slump (decline) and he called upon businesses to invest. 
  • But while he touched on his decision to strip Jammu and Kashmir of its special constitutional status, J&K will need quietness (peace) and slow time to return to normalcy. There were elaborate mentions of unitary schemes - from the ‘one nation one tax’ that is already in place, to a ‘one nation, one poll’ plan that is in the making. 
  • Such overarching plans are central to his vision and the speech reflected that thinking. But if India is to be on a new course for the better, it needs more than grandstanding from the Red Fort. Deeds must follow words as noon follows dawn.

Source: The Hindu, Google Images