Tuesday, November 19, 2019
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Bilateral Trade Wars Taking Away From Economic Agenda Of Developing Nations

When India hosts the G-20 Summit in 2022, it will be the first time a developing country will shape the global economic agenda. While that is ambitious, it is the run-up to the New Delhi Summit that is worrying.

The trade war between the U.S. and China is not only causing enormous collateral damage but also having a domino effect. Witness the spat between Japan and South Korea with the former blocking the flow of raw materials required by the semi-conductor industry in the latter country. Japan has also deemed Seoul as not having “trustworthy export control systems,” after some Japanese hydrogen fluoride was shipped to North Korea from the South.

The other story is the digital tax France is levying on tech giants but basically impacting Google, Apple, Facebook and Amazon (not for nothing is it called the GAFA tax). Washington has demanded that the tax be withdrawn, even hinting at sanctions. The French seem determined to go ahead. From India’s point of view, it obliquely reflects on a similar confrontation between the U.S. and India over New Delhi’s objections to the free flow of data, which if allowed, would benefit the same lot of U.S. tech giants.

The U.S. stand on rejecting any reform of the World Trade Organisation (WTO) presents another set of challenges. “The U.S. knows its tariffs-driven trade war (against China) is not compliant with the WTO rules and can be challenged, therefore it’s blocking the appointment of judges to the appeals chamber of the dispute settlement mechanism,” an official noted.

If the mechanism is emasculated, the U.S. would be the major gainer, using its economic and political heft to force deals on other countries. The U.S. would not be alone in that respect, China will be close behind. “The point to note,” said a trade specialist, “is that India’s problem is not only with the U.S. when it comes to unilateralism, it’s also China.”

India is of course hopeful the trade wars of today would have ended by then and the Delhi G-20 could focus on issues close to the heart of developing countries, including whether the G-20 global agenda is relevant to the needs of the developing world; how to address issues of health and education among others; the widening technology gap between rich and poor countries and so on.

But the divergence between the developed and the developing world cannot be denied, and with the former turning inward, becoming more protectionist, the dice are loaded against the developing world

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