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Will India benefit under new US trade Czar Katherine Tai? The chances are-it will

As American-Chinese Katherine Tai gears up to take over as US trade representative (USTR) in January under president-elect Joe Biden, the focus has swiftly shifted on her and the possible changes that she could introduce measures to boost the coronavirus-battered economy amid a rapidly changing world order. Tai, also a well-known trade lawyer, has promised to be “an advocate for American workers” indicating that the US, at least on surface, is likely to continue with the broader protectionist contours under the “America First” dictum outlined by outgoing President Donald Trump.

Yet the devil will be in the detail.

Tai will replace Robert Lighthizer, who is currently serving as the USTR. Appointed in 2017 by Trump, Lightizer is
known for his tough approach on trade as he believed that US trade agreements have primarily favoured other economies.

While foreign policy analysts and economists said that Tai is likely to take on China for its “unfair trade practices” they opined that the tariff measures, considered outdated as a trade weapon, that were put in place by the Trump administration could be eased, which could benefit many countries including India.

“There is unlikely to be any change or turbulence. India and the US enjoy trade ties which are driven by long term strategic interests in the Indo-Pacific and beyond," says Narendra Taneja, energy specialist and BJP spokesperson in a conversation with IndiaNarrative.com.

India is the US' eighth-largest trading partner in goods and services.

Trade in goods and services between the two countries surged from $16 billion to $142 billion between 1999 and 2018, but tensions have increased too, the Council on Foreign Relations said, pointing to the hangover of the Trump era. The Trump administration has removed India from the list of Generalized System of Preferences (GSP), a special trade treatment for developing countries.

According to Peterson Institute for International Economic (PIIE), Trump imposed tariffs of 25 per cent on $761 million of steel and of 10 per cent on $382 million of aluminum imported from India. “Combined, these tariffs covered roughly 2.3 percent of India’s exports to the United States in 2017,” the PIIE study said.

Under Biden, nuanced shifts in trade policy are possible “US stand on China especially with respect to trade will remain as it is but there could be a shift in terms of other allies including India,” Nirupama Soundararajan, senior fellow & head of research, Pahle India Foundation (PIF) said. She however said that India must put things in order at home to boost trade.

But other Indian economists are skeptical about a clear shift in policy under the new USTR. “Given that India was unable to get an acceptable trade agreement out of the Trump administration, it is unlikely that it would get one out of the Biden administration. USTR Tai may prove no less difficult than Lighthizer,” Sanjaya Baru, economist and media adviser to former prime minister Manmohan Singh said.

However, Biden said that Tai will work in tandem with the other critical teams handing economic, security and foreign policy. "She understands that we need to be more strategic in how we trade – in a way that makes us all stronger and leaves no one behind," Biden said. According to the the US Department of State an expanded trade
relationship with India that is reciprocal and fair is what the country is looking for..