Promise of a Pact
(Source: Indian Express, National Page)
Also Read: The Indian Express Editorial Analysis: 04 June 2025
Also Read: The Hindu Editorial Analysis: 04 June 2025
Topic: GS Paper 2 (International Relations), GS Paper 3 (Economy – Trade, Globalization) |
Context |
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Background
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Trade War Legacy: Under former US President Donald Trump, US-China relations soured, leading to a trade war involving tariffs on hundreds of billions of dollars of goods.
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Biden’s Diplomacy: Rather than returning to large multilateral agreements like the Trans-Pacific Partnership (TPP), President Biden launched the Indo-Pacific Economic Framework (IPEF) to assert U.S. economic influence in Asia.
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China’s Counterbalance: China focuses on advancing the Regional Comprehensive Economic Partnership (RCEP) and deepening ties with ASEAN, Central Asia, and Africa through infrastructure and digital linkages.
Key Points:
Signs of a New Bilateral Pact:
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After years of friction, there are indicators that Beijing and Washington are preparing to restart trade-level dialogue.
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A fresh agreement, though unlikely to be as ambitious as TPP, could help stabilize the global economy and reduce uncertainty in global supply chains.
Strategic Parallelism:
While bilateral discussions are underway, both countries are pursuing parallel regional trade agreements:
- The U.S. with IPEF (includes India, Japan, Australia).
- China with RCEP (includes ASEAN, Japan, South Korea, Australia, NZ).
Infrastructure and Digital Race:
The contest isn’t only in physical goods but extends to:
- Digital standards and regulations
- Green energy cooperation
- Critical technology supply chains (semiconductors, rare earths)
India’s Stakes and Strategy:
Current Engagement:
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India is a founding member of IPEF but not a part of RCEP.
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Actively pursuing bilateral trade deals (e.g., UAE, Australia, EU in negotiation).
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Focus on improving logistics, port infrastructure, and digital trade regulations.
Risks & Opportunities:
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Opportunity: If US-China relations stabilize, global markets may benefit, aiding Indian exports.
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Risk: If a new bilateral pact sidelines IPEF or dilutes its relevance, India may lose strategic leverage.
Domestic Actions Required:
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Fast-track pending FTAs (EU, UK).
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Boost “Make in India” with global supply chain integration.
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Leverage G20 presidency (2023-2024) legacy to position India as a global trade mediator.
Way Forward:
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Remain diplomatically agile without choosing sides.
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Prioritize self-interest in all trade engagements.
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Use digital economy, green tech, and supply chain resilience as growth anchors.
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Forge stronger South-South partnerships to hedge against over-dependence on West or China.
Practice Question: With the revival of U.S-China trade talks and competing regional trade frameworks like RCEP and IPEF, how should India calibrate its trade policy to protect its interests and assert its economic sovereignty? (GS2 – 250 words – 15 marks) |