Global trading system poised for a new
normal (The Hindu)
Mains Paper 2: International Relations
Prelims level : World Trade Organisation
Mains level : Bilateral trade grouping and its affect India’s interest
- The tale of two events at two different points of time demonstrate
- One occurred in 2001, and another is about to take place on January 15.
- While the first event happened against the backdrop of the 9/11
terrorist attacks and the impending Iraq war, the second is about to unfold
amidst escalating US-Iran tensions.
- In both events, the dramatis personae are the same: the US and China,
the world’s two largest economies.
Protracted negotiations preceded:
- The US paved the way for China to join the World Trade Organisation (WTO)
in 2001, after extracting a significant price by forcing Beijing to slash
its tariffs on industrial and agricultural products to levels that
industrialised countries took more than 200 years to bring down. China had
also committed to reduce subsidies and other trade-promoting measures for
industry and agriculture.
- Beijing had agreed to reduce its de minimis support for agriculture
producers below what was allowed for developing countries.
- For almost 15 years, anti-dumping investigations against Chinese
products were punitively high as they were treated as products originating
from non-market economy. \
- China chose to pay the price to establish its presence in the global
- The US says China aggressively promotes 10 advanced manufacturing
industries domestically “to replace foreign products with Chinese companies’
products in the China market through a variety of fair and unfair means,
including through the extraction of foreign technologies,” according to a
2017 report to the US Congress by the Office of the US Trade Representative
in January 2018.
- The continued ballooning of the US trade deficit which touched $648
billion in manufactured goods last year and the loss of five million jobs
during the last 16 years demonstrates that multilateral, regional, and even
bilateral trade agreements with Korea and others, have only brought de-industrialisation
- In short, the US argues that ever increasing trade deficits are an
offshoot of the manner in which it was duped, cheated, and deceived by its
trade partners who refused to play by the rules governing the so-called
“fair and free trade”.
- The new Sino-US normal attempts to cock a snook at the global trading
system based on rules and comparative advantage.
- So, the trade war between the two largest economies in the world has
almost paved the way for managed trade in which countries compete not on the
basis of their comparative trading strengths but on sheer market and
- There will be several collateral causalities in the global trade because
of this new normal.
- Countries like Australia, Brazil, Argentina, and other major farm
producers will take a hit once orders from China dry up because of the
purchase of American farm products.
- There is no guarantee that trade relations between the two major powers
will dramatically improve.
- Indeed, the trade war could continue for a considerable period of time.
- It is essentially a battle over who is going to be the hegemon
and who is going to lead the fourth industrial revolution,” former South
African trade minister Rob Davies told this columnist.
Q.1) With reference to the Mutual Legal Assistance Treaties, consider the
1. India has Mutual Legal Assistance Treaties, MLAT with 42 countries and is
signatory to various International Conventions for cooperation in criminal
matters and Union External Affairs Ministry is the designated central authority
for the country.
2. Under the MLAT, a country can request for obtaining evidence for criminal
investigations and prosecutions.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Q.1) As US strives to strike a beneficial bilateral deal with China, it’s
paving the way for ‘managed’ trade among countries. Elucidate the statement.