8th Ministerial Meeting of India-U.S Economic & Financial Partnership Dialogue

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    • The eighth ministerial meeting of the India-U.S.A. Economic and Financial Partnership Dialogue was recently held at Washington D.C.
      • The meeting was chaired by India’s Union Minister for Finance & Corporate Affairs and the Secretary of the Treasury of the United States.

    History of Indo-US Economic and Financial Partnership Dialogue

    • The US Treasury and India’s Ministry of Finance launched the Indo- US Economic and Financial Partnership Dialogue in 2010.
      • It was launched as a framework with the following aims:
        • To cement the economic bonds between our two nations and 
        • To build a foundation for greater cooperation and economic growth in the future. 

    Key Highlights of the Meeting

    • During the ministerial meeting of the India-U.S.A. Economic & Financial Partnership, discussions were held on a range of subjects.
    • The discussions included 
      • The macroeconomic outlook and recovery from the COVID-19 pandemic:
        • Successful collaboration on attracting more private sector capital to finance India’s infrastructure needs will support growth in both countries.
        • The US continues to provide technical support to India’s National Infrastructure and Investment Fund (NIIF).
        • India and the US also look forward to working together to prepare more cities to issue municipal bonds.
      • Financial regulatory and technical collaboration:
        • The United States and India look forward to discussions on emerging financial sector topics, such as 
          • cross-border payments and payment systems and 
          • the development of the International Financial Services Centre at GIFT City.
      • Multilateral engagement:
        • As India prepares for its 2023 G20 Presidency, the US stands ready to support India in hosting a successful and productive year.
        • Both sides affirmed their commitment to debt sustainability and transparency in bilateral lending.
        • Both discussed the importance of working through multilateral development banks to help India access and mobilize available financing to support development objectives, including for climate. 
        • Both welcomed the OECD/G20 Inclusive Framework political agreement.
          • It represents a significant accomplishment for updating the international tax architecture.
          • It establishes an international tax system that is more stable, fairer, and fit for purpose for the 21st century.
        • Both reviewed the progress made in sharing financial account information for tackling offshore tax evasion.
          • It is governed by the Inter-Governmental Agreement pursuant to the ForeignAccount Tax Compliance Act (FATCA).
      • Climate finance:
        • The US reiterated the collective developed country goal to mobilize $100 billion annually for developing countries from public and private sources.
          • It will be used for meaningful mitigation actions and transparency on implementation.
        • Both emphasised on the Finance Mobilization for the recently launched Climate Action and Finance Mobilization Dialogue (CAFMD).
          • It is under the U.S.-India Climate and Clean Energy Agenda 2030 Partnership.
      • Anti-money laundering and combating the financing of terrorism (AML/CFT):
        • Both will  increase information sharing and coordination for combating money laundering and terror financing.
        • Both sides agree on the importance of 
          • fighting financial crimes and 
          • on the effective implementation of the Financial Action Task Force standards to protect our financial systems from abuse.
    • Both sides affirmed their commitments to continue collaboration both at bilateral and multilateral fora.
      • They will jointly address mutual and global economic issues and strive towards amicable strategies and solutions.

    India- US Relations

    • India and the USA have seen various ups and downs in their relationship.
      • There are multiple points of convergence and divergences.

    Points of Convergence

    • Defence and Security: 
      • India has signed all 4 foundational agreements with the USA including.
        • General Security of Military Information Agreement (GSOMIA)
        • Logistics Exchange Memorandum of Agreement (LEMOA) 
        • Communications, Compatibility and Security Arrangement (COMCASA)
        • Basic Exchange and Cooperation Agreement for Geo- Spatial Cooperation (BECA)
      • A ‘2+2’ foreign and defence ministers dialogue has been started.
      • Malabar Exercise and QUAD
    • Economy:
      • Indian Petronet, an LNG company, will invest in American gas company Tellurian.
      • India is buying defence equipment worth $3-billion, including American helicopters (MH-60 Romeo helicopters) this year itself.
      • India has a trade surplus with the USA.
    • Energy Security:
      • A bilateral Strategic Energy Partnership was launched in April 2018.
        • Under this India has started importing crude and LNG from the US.
        • Now, the US is India’s sixth-largest source of crude oil imports and hydrocarbons.
    • Renewable Energy:
      • A commercial agreement for Westinghouse to build six nuclear reactors in Andhra Pradesh.
    • Geostrategic:
      • China’s hegemony in the South China Sea as well as the Belt and Road Initiative is creating trouble for both India and USA.
    • Anti Terror Cooperation:
      • Designation of Jaish-e-Mohammad chief Masood Azhar as a global terrorist under UN Security Council Resolution 1267 after Pulwama Attack needed support from the US.
      • Further placing Pakistan in the FATF grey list is also a mutual decision.
    • Pivot to Asia Policy of USA:
      • The US under its Pivot to Asia policy views India as an ideal balancer to check the aggressive rise of China.
      • Therefore, the US has formulated the concept of Indo-Pacific to counter China in the South China Sea and the Indian ocean.
      • The US has designated India as an integral part of the Indo-pacific narrative by the conception of Quad.

    Points of Divergence

    • Trade Deal: 
      • The USA is worried about the trade deficit it has with India.
      • Further, India’s benefits under the Generalised System of Preferences (GSP) scheme were terminated by Trump in 2019.
        • The GSP provides preferential, duty-free access for over $6 billion worth of products exported from developing countries to the US.
    • Different cases/ disagreements at WTO:
      • India’s domestic component clause was a bone of contention.
      • Similarly there is lack of consensus over the IPR regime and evergreening of patents.
      • Peace Clause and Public Procurement Policy
    • Digital Data:
      • The US, Japan, etc support Free Flow of Data with Trust whereas India has raised red flags on it.
    • Agriculture:
      • The US has long demanded greater access to American agriculture and dairy products. 
      • For India, protecting its domestic agriculture and dairy interests was a major reason to walk out of the RCEP agreement.
    • US-Pakistan Equation: 
      • The US has often shown a soft corner for Pakistan due to dynamic equations in Afghanistan. 
    • CAATSA:
      • The USA, although has given special waivers, still time to time threatens to impose CAATSA on India over trade with Iran and Russia.
        • Both are very strategic for countering China and Pakistan.

    Source: PIB, NewsOnAir