Dear Friends,
It was a pleasure listening to you on ET NOW ( 28
March ) on “ How India can become $ 10 trillion economy “
In this context , my following blog might interest you
With Regards,
hemen
parekh / Mumbai
A #TradeWar Epidemic ?
Not
everyone agrees but there are unmistakeable symptoms
For
differing reasons, all countries want to #export more and #import less
Emerging
countries believe that an export-led economic growth could raise per capita
income of its poor citizens and create jobs for millions of their #unemployed
youth .
They
think their own domestic consumers just don’t have enough money to consume more
of locally produced goods
Then
there is USA , which believes that , in order to correct the #trade-imbalances
, other countries must :
# buy
more from USA
# export
less to USA
#DonaldTrump
also believes that local Industries – and jobs within those industries – can be
saved from getting decimated by imposing high #import-duties on imports into
USA
By
imposing 25 % duty on Steel / 10 % duty on Aluminum / 70 % duty on Solar Panels
, he thinks he can save 170,000 American jobs
But
some economists think , this step will destroy 450,000 jobs in the US
automotive industry , since input costs will push up selling prices, which in
turn , will reduce the demand ( local + export )
At
the same time, Trump has agreed to exempt Canada / Mexico from these revised
duties
Other
major steel-exporting countries ( to USA ) , are asking similar exemptions !
Some
( like EU ) are even threatening counter measures on US exports to them !
As
of yesterday , US has slapped a “ #AntiDumping
Duty “ on stainless steel flanges imported from India , claiming
these are priced 18 % to 145 % below their fair value !
Not
leaving things at this, last week US has lodged a complaint with #WTO against India !
US
wants India to stop all #ExportSubsidy to
its exporters , as mandated by #WTO clause
{
Since, India’s per capita #GDP exceeded
$ 1,000 per year for 3 years in a row }
"These #Eexport-Subsidy programs harm
American workers by creating an uneven playing field on which they must
compete," said US Trade Representative Robert Lighthizer.
I
believe India’s Export Subsidies , add up to $ 7 billion per year
No
doubt , Commerce Minister Nirmala Sitharaman and Commerce Secretary Rita
Teaotia , will defend India’s position at#WTO
They
may even succeed in getting extension of a few years for India to phase out /
dismantle its current practice
But,
at the most , they may succeed in “ postponing the evil day “ !
As
FIEO , Director General , Ajay Sahai told
PTI :
"It is a huge concern for export sector and the industry
feels that the so called export subsidies should be
eliminated gradually "
We , in India , must realize the following :
· Trade wars will intensify with all countries trying to
protect local jobs / industries
· In this “ dog eat dog “ world, WTO cannot continue to
provide much protection, where large importing countries want to “ balance
their trade surpluses / deficits “
· #Multilateralism will gradually give way to
#Bilateralism
· Bilateral Trade Agreements will be a matter of “ trade
off / give and take “
· In this war there will be neither permanent friends
nor permanent enemies
· Even an enemy of your enemy, may not count as your
friend !
· Only way to survive, will be by ensuring
that we turn India into a :
#LOW-COST-ECONOMY,
where we can compete with the rest of the world ( for
our share of the World trade ), on the basis of a BETTER QUALITY / LOWER PRICE / FASTER DELIVERY , of our products and
services
We must immediately implement #REFORMS which will help our
companies lower their costs of :
# Manpower ( Salaries
/ Wages )
# Materials ( Raw
materials / Components / Sub Assys )
# Money ( Funds
/ Finance / Capital )
# Space ( Constructed
factories / offices / homes )
# Management ( Manufacturing
and Marketing Overheads )
# Compliance ( Forms
/ Reports to be filled / filed )
# Corruption ( Bribes
to be paid to Govt Agencies / IT dept )
# Non-Governance ( MPs
– MLAs fail their responsibility )
As far as enabling Indian companies to lower their
costs is concerned , ( - thereby , effectively making them more
competitive in export market ), there is an urgent need for our governments ( both at the
Centre and at the States ) , to :
· Speed
up the pace of #REFORMS already initiated during past 4 years
· Initiate NEW REFORMS
During
the past 4 YEARS , I have sent
many suggestions to our Policy Makers
It
is not possible to list all of these here
But
, readers interested to know , may look up a few of these at :
· Agenda for Reforms [ 01 Oct 2015 ]
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