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US postpones high-level dialogue with India as Donald Trump’s tariff threats ratchet up global tensions

The US has ratcheted up global trade tensions with tariff threats - prompting several countries, including India, to retaliate

PUBLISHED : Thursday, 28 June, 2018, 11:13am
UPDATED : Thursday, 28 June, 2018, 9:49pm

The United States has announced postponement of a high-level dialogue with India scheduled for next week in Washington, DC, without assigning any reasons even as its ambassador to the United Nations met with top Indian leaders in New Delhi to step up ties in various fields.

US Secretary of State Mike Pompeo spoke with India’s External Affairs Minister Sushma Swaraj and expressed regret over the dialogue postponement for “unavoidable reasons”, said India’s External Affairs Ministry spokesman Raveesh Kumar in a tweet.

No new dates were announced for the meeting.

Swaraj and Defence Minister Nirmala Sitharaman were to hold talks with their American counterparts Mike Pompeo and James Mattis next week on economic, trade and defence issues.

The announcement came at a time of heightened trade tensions between the two countries.

India last week announced a plan to raise tariffs on 29 US imports in retaliation for the US decision to include India in its list of countries covered by higher steel and aluminium duties.

The US ambassador to the United Nations Nikki Haley said Wednesday she saw opportunities in developing stronger ties with India in multiple ways, especially in fighting terrorism and military cooperation.

Haley said her two-day visit to India was aimed at solidifying the partnership between the two countries.

She met with Prime Minister Narendra Modi and Swaraj on Wednesday.

Haley, the South Carolina-born daughter of Indian immigrants, said “the idea of a trade war wasn’t even an option.”

Bilateral trade rose to US$115 billion in 2016, but the Trump administration wants to narrow its US$31 billion deficit with India, and is pressing New Delhi to ease trade barriers.

US-India relations have generally prospered in the past decade, in part because of their shared concerns about the rise of China. Both share goals of security, free navigation, free trade and fighting militants in the Indo-Pacific region.

To improve India’s military capabilities, the United States has offered to sell it unarmed Guardian surveillance drones, aircraft carrier technologies and F-18 and F-16 fighter aircraft.

Haley and Modi on Wednesday discussed ways to enhance India-US cooperation, including on counterterrorism, said a statement by Modi’s office.

But Trump’s moves to protect US trade interests was also creating unusual bedfellows in Asia.

India and China, long-standing economic and strategic rivals, were seeing a thaw in relations less than a year after the most serious border flare-up since a war in 1962 threatened ties between the two Asian giants.

Since May, China has made it easier for India to export non-Basmati rice, removed import duties on anti-cancer drugs and agreed to share data that predicts river flows between the two countries during the flood season.

Chinese President Xi Jinping and Modi have met twice since April, pledging to strengthen bilateral ties.

Driving the marriage of convenience is Trump’s unpredictable policymaking. The US has ratcheted up global trade tensions with tariff threats against China, Canada, Mexico and the European Union, prompting several to retaliate.

“China understands that this trade war situation isn’t going to end in a few days or even months,” said Bipul Chatterjee, executive director of an India-based trade think tank.

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“They wouldn’t want to open more than one battle front. The focus is now on confronting the US”.

India’s two-way trade with China touched nearly US$90 billion last year, making it the largest commercial partner of the South Asian economy.

Closer trade ties seem incongruous less than a year after troops from the two nuclear-armed nations faced off in a dispute in the remote Doklam Plateau between India, Bhutan and Tibet, triggered by China’s attempt to build a road there.

Tension eased after the two countries agreed to an “expeditious disengagement” of troops from the area in late August, with Modi and Xi later pledging to strengthen communication between their respective armies at the informal summit this April.

Another sore point in the bilateral relationship has been China’s ambitious global infrastructure plans, which include projects in New Delhi’s Indian Ocean backyard that domestic analysts worry have a strategic dimension.

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Under the so-called Belt and Road Initiative, China has financed ports and roads from Myanmar to Sri Lanka and Pakistan. India is one of the only holdouts globally.

At a recent foreign ministers meeting of the Shanghai Cooperation Organisation, a China-led group, India was the only member country not to endorse China’s Belt and Road plans.

Drawing the most alarm for India is the US$60 billion China Pakistan Economic Corridor, which runs through Pakistan-administered land in the disputed border region of Kashmir. New Delhi claims the region as its own territory.

Associated Press, Reuters and Bloomberg