US-India to sign $10 billion trade deal amidst American hyper-partisanship

Kashish Parpiani
Februay 16, 2020


In the run-up to US President Donald Trump’s visit to India on February 24-25, speculations continue over the impending bilateral trade package. During the American president’s maiden visit to India, the two countries are expected to sign a limited trade deal worth over $10 billion. 

In seeking “fair and reciprocal” trade deals, the Trump administration has not shied from adopting punitive measures against allied and partner nations. Similarly, over the past three years, tensions on the trade front have gradually escalated between India and the US. Although the US’ trade deficit with India has begun to narrow and stands at less than a tenth of the US’ trade deficit with China, New Delhi has not escaped Washington’s ire. 

As trade negotiations stalled, the Trump administration levied steel and aluminum tariffs on India, revoked India’s status under the Generalised System of Preferences program, briefly contemplated limiting Indians’ H1-B visas quota to 15 percent due to divergences on e-commerce, and raised the prospect of a Section 301 investigation into India’s tariff and non-tariff trade barriers.

The impending trade package reportedly may lead to incremental gains such as greater market access for US agricultural and ICT products, possibly in exchange for partial/complete restoration of India’s GSP benefits. Certainly, the deal could be pivotal in dampening US-India trade tensions. However, the signing of the deal in the context of the upcoming 2020 US presidential elections and American hyper-partisanship, reemphasizes the cruciality of US bipartisanship on India.

Acquitted and vindicated 

Earlier this month, the Republican-controlled US Senate voted to acquit Trump on both impeachment articles — abuse of power and obstruction of Congress. The same was an expected outcome amidst rising polarisation. The resultant hyper-partisanship was also on full display at Trump’s State of the Union address, which began with his refusal to shake hands with House Speaker Nancy Pelosi and ended with her tearing the advance copy of the president’s remarks.

Beyond exacerbating American polarisation, Trump’s acquittal also bears heavily on the efficacy of the ‘America First’ worldview. 

To recap, the impeachment proceedings began in the Democrat-controlled House of Representatives and were focused on Trump’s conduct of American international relations. In a testament to the real estate mogul-turned-US president’s transactional worldview, Trump allegedly sought the Ukrainian dispensation’s assistance in digging dirt on former Vice President Joe Biden — and presumed Democratic front-runner for 2020, in exchange for military aid. 

Although the bid to impeach Trump fell short of conviction in the Senate, one can expect the alleged quid pro quo with Ukraine to feature significantly in the upcoming 2020 presidential elections. By extension, the Trump administration’s values-berefttransactional ‘American First’ conception of US foreign policy will also accrue considerable attention. 

As a result, with his re-election campaign, not only will Trump hail his Senate acquittal as total exoneration on the Ukraine matter, but also construe the same as being a validation of his conduct of US foreign policy in general. Wherein, his administration’s successful renegotiation of trade deals with US partner nations will be touted as the ‘America First’ approach’s efficacy. Here, the US-India limited trade deal will be listed amongst other renewed partial/complete trade deals — such as the USMCA deal with Canada and Mexico, renegotiated trade terms with South Korea, and Japan; and finally the Phase One deal with China, as instances of vindication.

If re-elected in the 2020 presidential elections, Trump, free from the pressures of seeking re-election, would possibly double-down on his will to seek renewed trade deals. At which point, remainder issues under US-India trade ties could witness heightened tensions.

Going back to business as usual?

One scenario under which the prospect of a more boisterous Trump 2.0 administration may stand dampened, however, pertains to the possible behind-the-scene political calculation that led to his Senate acquittal. According to Steve Bannon, former Chief Strategist in the Trump White House, Trump’s acquittal may have been conditional. According to Bannon, in exchange for Senate Republicans voting to acquit, certain changes to the “Trump agenda” may be “extracted”. Citing “establishment” Republicans’ liberal internationalist and neoconservative impulses, Bannon believes those changes could aim to dampen Trump’s positions against corporate-friendly immigration policies, his confrontational approach to trade with China, and his populist commitment to ending American military engagements abroad. 

Despite Bannon’s suppositions, there is a certain degree of probability that Trump’s second term will be constrained by forces on Capitol Hill. However, the same may not entirely stem from American legislators’ penchant for coddling Wall Street, Corporate America’s interests in sustaining access to the Chinese market or the Military-Industrial Complex’s influence on US foreign policy — as Bannon would have Trump’s “base” believe, but from an evolving tussle between the US legislature and executive branches of government. 

Long before Trump’s ascendence to the US presidency, the executive branch of the US government had seen an expansion of its powers. Cases in-point being, the George W. Bush and Barack Obama administrations’ expansion of executive authority on deploying US forces — via usurpation of the Congress’ war-making powers under the guise of imminent national security threats. With the election of Trump, the threats posed by an “imperial presidency” in the hands of a temperamental Commander-in-Chief has sparked Congressional will to reinstate separation of powers. 

Already, on foreign policy decision-making, the US Congress has passed stop-gap provisions on unconventional executive directions like ordering a drawdown of troops from the Korean peninsula and initiating an American withdrawal from NATO. Even with the US Congress being divided into two partisan strongholds — with the Democrats in charge of the House of Representatives and Republicans holding the Senate, a joint resolution to warrant Congressional approval in case Trump engages with Iran militarily is gathering bipartisan steam.

Make Bipartisanship on India Great Again!

Under this coming focus on curbing executive overreach, the legislature may witness a return of a certain sense of uneasy bipartisanship after a prolonged period of rabid partisanship. 

Certainly, the same would most likely not lead to the resolution of competing domestic agendas on immigration reform and gun control, the common effort to constrain the presidency and Trump in the short term, however, may animate Congressional relevance beyond 2020. 

Moreover, this odd resurgence of bipartisanship would also stand reinforced by the Senate entering an era of minimal majorities. Currently, the Republican majority in the Senate has impeded many of the Democrat-led House’s actions. However, its slim majority of 53-47, has opened the door to defections by legislators who do not always identify with the Trump agenda’s hold over the Republican Party. Defections were witnessed in some cases like the Trump administration’s attempt to repeal Obamacare (late Sen. John McCain (R-AZ) voted no), confirmation of Judge Brett Kavanaugh (Sen. Lisa Murkowski (R-AK) voted present), and Trump’s Senate trial (Sen. Mitt Romney (R-UT) voted to convict).

Thus, the inclination to appeal to moderates on either side would only increase once Democrats — even in their worst-case scenario in 2020 of not winning back the White House, at the very least chip away at the Republicans’ already slim majority in the Senate.

This likely scenario makes it imperative for India to work towards reinstating the bipartisan support on the Capitol Hill. Over the past year, Congressional bipartisan support for India has increasingly come under strain due to instances like the apparent partisan fervour of the ‘Howdy, Modi!’ rally.

Thus, going forward, New Delhi must ensure the signing of the US-India trade package is projected as again for the bilateral relationship, and not towards appeasing the incumbent administration.

*** The author is Research Fellow at the Observer Research Foundation ***