Economic Barriers in Trump Era Spells Collateral Damage for India

Often, the problem with politicians is that they do not keep their promises. With Donald Trump, the problem is the opposite. He is bent on keeping the many immoderate promises he made during the electoral campaign.The architecture of international relations that America has progressively put in place since 1945 is being shaken. Trump has created a sense of discomfort amongst America’s allies, adversaries and those in between. All have concerns about the uncertainties he has created.The disruptive nature of the US power is being displayed unabashedly under the new American president.India Likely to Suffer Collateral DamageIndia is not the object of Trump’s principal concerns about the state of the US economy. The US is not protecting us militarily. We are not part of the US led trade blocs which Trump feels were badly negotiated. We are not the source of his concerns about Islamic radicalism and terrorism. We are not challenging US power in areas vital to it. There is no refugee influx from India to the US.Apart from the H-1B visa system, of which India is the biggest beneficiary and on which views amongst Trump and his entourage are adverse, India will not be the direct object of Trump’s sense of grievance against the world. However, we are likely to suffer from collateral damage from his disruptive thinking as that will unsettle many assumptions. But on the issue of combating Islamic terror, improving ties with Russia and curbing China, our geopolitical interests could be well served.Protectionist Attitude Will Hurt Service SectorTrump is openly protectionist and against globalisation. He sees America as a victim of the international system that the US has itself created. His principal concern is the loss of manufacturing jobs in America, the blow inflicted on the American working class with closing of factories and so on. In this context, his wrath is directed at NAFTA and China in particular, with a swipe at Japan and South Korea.India, which is struggling to develop its own manufacturing sector, has not caused any loss of manufacturing jobs in the US. It is in the services sector that we are in the cross hairs of Trump’s circle.There is continuity here as Obama was demonising Bengaluru for stealing American jobs and his administration was piling pressure on us on H-1B and L1 visas. The fee for H-1B visas was being raised to pay for stronger controls on the Mexican border against illegal immigration.Also Read: Indian IT Firms to Meet Trump Officials on Visa Reform ConcernsFirm Message from WashingtonTrump spoke of clamping down on H-1B visas during his campaign. His Attorney General Jeff Sessions is ferociously against them. Reports suggest that the Trump administration intends to double the minimum wage payable under the H-1B scheme, apart from tightening other conditions. The big internet giants like Apple, Microsoft and Facebook believe in the value of the H-1B visa system, the talent it attracts and the contribution it makes to innovation in the Silicon Valley.Some analysts believe that the US is short of engineers and technicians in this sector and that the ban on H-1B visas is not a practical proposition. We have made representations to the US government in the past on this issue as it damages the Indian IT industry for which the US is by far the largest market. The NASSCOM is planning to lead a delegation to the US shortly to engage the Trump administration on the subject.The very firm message from Washington so far is that we must accept the reality that awaits us. Our strategy under the circumstances would be to work on the details of the planned changes in the legislation so that the impact on our IT industry is attenuated as much as possible.Hardened Economic PostureOn economic issues, we should expect tougher times with the Trump administration. Even with the Obama administration, we had serious differences on WTO-related issues. The US Congress, under pressure from US corporations, had ordered an investigation on India’s trade, investment and IPR policies. The US pharmaceutical was one of the prime movers of the investigation.Under Trump we may come under pressure on patent issues, though his declared intention to reduce medical costs in the US could attenuate pressure on India’s generics industry. The previous USTR had a particular antipathy towards India’s approach to international trade negotiations and opposed India’s entry into APEC.With Trump being openly protectionist and determined to single-mindedly advance US interests our negotiations with the US are likely to become more difficult, including the Bilateral Investment Treaty. The hardened economic posture of the US comes at a time when India wants to develop its manufacturing sector and aims to attract greater US investment to boost our economic growth.The slump in our exports cannot be remedied with protectionist tendencies around the globe under US impulsion. Trump’s trashing of the TPP, of which we were not a part, relieves pressure on us.(The author is former Foreign Secretary of India. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)Also Read: In Photos: Asians in the US Take on Trump’s Immigration Ban

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Economic Barriers in Trump Era Spells Collateral Damage for India

India should brace itself for collateral damage due to Trump’s protectionist stand, writes Kanwal Sibal.

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Topics: H1-B Visa US President Donald Trump