India, Australia, Japan to launch trade initiative . . .
Several significant shifts in India’s trading relationships took place this week. To start, it joined Japan and Australia in preliminary talks on a Supply Chain Resilience Initiative (SCRI) to lessen dependency on China in light of Beijing’s recent political and military behaviour. The SCRI aims to attract foreign direct investment, build economic linkages, and minimize supply chain disruptions among its members. The initiative could include ASEAN at a later date. For now, the three countries plan to hold their first formal ministerial talks next week, with the aim of launching the SCRI as soon as November.
Trump and Modi’s fanfare-filled deal may not close . . .
Meanwhile, the clock is ticking down on an India-United States trade agreement, long-touted by Prime Minister Narendra Modi and President Donald Trump as a guaranteed deal. The two parties have been working since last year to build a narrow trade deal that could eventually morph into a full-fledged free trade agreement. The sticking point for India, however, is agricultural liberalization. Although agriculture accounts for only 15 per cent of India’s economy, it accounts for nearly half of its total employment. According to Indian officials, without a signed deal in the next two-to-three weeks, the countries will have to “start from scratch” due to the upcoming U.S. elections in November.
November shaping up to be a critical month . . .
Elsewhere, India’s participation in a Regional Comprehensive Economic Partnership (RCEP) now appears extremely unlikely. India, a major market for most of the pact’s 15-member economies, withdrew from negotiations last year, mainly over concerns about its growing trade deficit with China. The participating countries now comprise the ASEAN member states, China, Japan, South Korea, Australia, and New Zealand. The final phase of negotiations began this week, with signing – without India – expected in November. Canada is seeking to increase its own trade with India. The SCRI challenges Canadian entry into those priority markets, while an India-U.S. deal threatens efforts by Ottawa and the provinces to grow agriculture exports. But the challenges in accessing India’s markets as highlighted in discussions around RCEP and the U.S. trade deal may leave the door open for Canadian entry, with the proviso that future negotiations could be difficult.