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

The editorial discusses signs of renewed trade negotiations between the United States and China, emphasizing the broader strategic implications of such a move in a world still reeling from economic disruption, supply chain shifts, and geopolitical fragmentation. It highlights how both nations are simultaneously engaging in regional partnerships, suggesting a possible convergence or divergence of global trade frameworks.

Background

• 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.

• 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.

• 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:

• After years of friction, there are indicators that Beijing and Washington are preparing to restart trade-level dialogue.

• 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:

• India is a founding member of IPEF but not a part of RCEP.

• Actively pursuing bilateral trade deals (e.g., UAE, Australia, EU in negotiation).

• Focus on improving logistics, port infrastructure, and digital trade regulations.

Risks & Opportunities:

• Opportunity: If US-China relations stabilize, global markets may benefit, aiding Indian exports.

• Risk: If a new bilateral pact sidelines IPEF or dilutes its relevance, India may lose strategic leverage.

Domestic Actions Required:

• Fast-track pending FTAs (EU, UK).

• Boost “Make in India” with global supply chain integration.

• Leverage G20 presidency (2023-2024) legacy to position India as a global trade mediator.

Way Forward:

• Remain diplomatically agile without choosing sides.

• Prioritize self-interest in all trade engagements.

• Use digital economy, green tech, and supply chain resilience as growth anchors.

• 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)