The likelihood of a US-India FTA is quite low, says former US envoy to India Kenneth Juster

Polls indicate that Americans may elect a Republican majority in Congress in the upcoming midterm elections. With a Democratic President in the White House, will this development impact bilateral ties or will it be business as usual?

US policy toward India has been one of the few issues on which there is broad agreement between Democrats and Republicans – on both the direction of the bilateral relationship and its importance to the United States. Regardless of the results of the midterm elections, I do not expect to see a material change in US policy toward New Delhi or in US-India relations.

Another midterm cycle seems to have confirmed suspicions that domestic divisions are rife in America. Some in New Delhi wonder whether these divisions may hamper America’s drive and focus internationally. Your view on these concerns?

Domestic divisions can weaken any country’s posture internationally. If a country cannot speak with a unified voice, its positions may carry less weight overseas. Moreover, if the United States is trying to project democracy as an effective system of government and as a model for other countries, our polarization at home and inability to enact critical legislative measures make our democracy a less persuasive model overseas. This challenge already exists to a certain degree and could be exacerbated if the election results in further political polarization.

The hope, however, is that America can increasingly elect representatives who are willing to work across the aisle with political opponents to find workable compromises – whether it be on criminal justice, immigration reform, or economic policy. The more we do that, the more other countries will perceive American democracy to be strong and moving in a positive direction. This, in turn, will enhance our ability to persuade other countries on issues of concern. That said, the US relationship with India is one area where there is no significant domestic division.

Since your departure, America has not appointed an Ambassador to India. What do you make of this delay given that the appointment has been held up in Congress? Is this a sign of domestic division? Will this impact bilateral ties adversely?

It is regrettable that we have not had an Ambassador to India in place for almost two years. However, I do not think that domestic divisions have caused this delay. The Democratic party currently controls the US Senate, which is the body that confirms presidential nominations. They could move forward with the confirmation of a US Ambassador to India. They have chosen not to do so at this time because of certain concerns, upon which I have no opinion, that have been raised regarding the nominee, Los Angeles Mayor Eric Garcetti. There are news reports that the Majority Leader of the Senate may bring this nomination to a vote right after the midterm elections, during the lame duck session of the current Congress. I should add that I have had conversations with Mr. Garcetti, and I have found him to be intelligent, knowledgeable, and energetic. Based on those conversations, I think he would be an effective envoy of the United States to India if he is confirmed.

In my view, the US-India relationship is in a strong place because the leadership in both countries attach importance to it and are actively involved in it. But there are limits to how much time and attention the top leadership in both countries can give to every issue. With a strong and capable- Ambassador, you would have someone who has access in India to key members of government, business, and civil society, and could effectively communicate the nuances of Indian policy back to Washington as well as provide a full understanding of US policy to Indians. Without an Ambassador, we are not operating at full capacity. I hope we can resolve this issue sooner rather than later.

What are some key areas of cooperation that excite you about the India-US relationship? Conversely, are there any fields where the partnership is underperforming?

The US-India relationship today encompasses virtually every area of human endeavour. Some of the areas that excite me include our continued cooperation on defense and security issues, our collaboration in the healthcare sector, such as developing and distributing vaccines for COVID-19, our joint work on energy security and the environment, our work on critical and emerging technologies, and our education partnerships.

One important area in which we should work together is the digital economy. Our tech sectors are critical to each country, and we should jointly set the standards for digital trade and commerce. To date, however, we have had very limited dialogue in this area.

Where do you see the bilateral economic relationship going? Do you see any prospects for an FTA?

When I first started working on US-India relations in 2001, our bilateral trade in goods and services stood at around $19 billion. Today, it is approximately $160 billion, and it continues to grow. Yet, given that the United States and India are, respectively, the world’s first and fifth largest economies, I feel that we are underperforming. When I was Ambassador, I urged Indian officials to consider negotiating a Free Trade Agreement (FTA) with America, but I did not get much traction. At the time, Indians were of the view that free trade agreements had not worked in India’s favour, and they were not enthusiastic about negotiating another one. While New Delhi has revived its interest in bilateral trade agreements, the United States, for domestic political reasons, is now focusing less on such agreements. So, the likelihood today of a US-India free trade agreement is quite low. However, both sides understand that they need to address economic issues in the region, especially because China is trying to dominate the regional economic playing field.

How do you view initiatives like the Indo-Pacific Framework (IPEF)? Are there benefits for the India-US relationship?

The IPEF is still in its early days. This initiative is intended to provide an alternative to participating in traditional regional trade agreements such as the Regional Comprehensive Economic Partnership or the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Neither India nor America currently wishes to join either of these agreements. It remains to be seen whether IPEF will gain the full traction sought by the parties. This is because IPEF does not include the consideration of market access provisions, which are so important to many countries, including those in Southeast Asia, and have often been an essential ingredient to trade agreements. The key question is whether countries participating in the IPEF can work together effectively on trade, supply chains, clean energy and infrastructure, and tax and anti-corruption, without the framework of a traditional trade agreement. If so, the IPEF would be very important for the India-US relationship.