( 20th August 2019 ) The Hindu Editorials Notes – Mains sure Shot for UPSC IAS Exam

 

GS-2 Mains Question – In the context of the PM’s visit to Bhutan, analyse the India-Bhutan relations. Is there any concern in relationship which india need to solve it ? (250 words)

Context – PM’s visit to Bhutan.

 

Background:

• Bhutan is a neighbouring country and acts as a buffer State between India and China.
• The relations between India and Bhutan are not new. It can be traced back to the ancient times and the origin of Buddhism in India and its spread to Bhutan is a good testimony.
• But the formal diplomatic relations between both the countries began after the establishment of a special office of India in Thimphu in 1968.
• In 2018, the Golden Jubilee of the establishment of formal diplomatic relations between India and Bhutan was celebrated.
• Before this the basic framework of India-Bhutan bilateral relations was the Treaty of Friendship and Cooperation signed in 1949 between both the countries.

A special relationship:

• There is a special understanding between both the countries with reflects in having open borders, close alignment and consultation on foreign policy, and regular, open communications on all strategic issues.
• Bhutan’s unequivocal support to India on strategic issues has meant a lot to India on the international stage and at the United Nations. 
• Also, Bhutan’s leadership has not hesitated in opposing threats to India; for instance, the former King’s efforts in 2003 to drive out ULFA rebels or more recently, support for India’s stand against Chinese troops on the Doklam plateau.
• In turn, India has consistently provided assistance to Bhutan’s planned economy, to constructing its highest revenue earner of hydropower generated electricity, and then buying the electricity generated.
• This has ensured a symbiotic and mutually beneficial base to the relationship.
• This special relationship has been sustained by the tradition of regular high-level visits and dialogues between the two countries.
• India is Bhutan’s largest trade partner.

Some examples of bilateral ties:

• Border Management- There is a Secretary-level mechanism on border management and security related matters. There is also a Border District Coordination Meeting (BDCM) Mechanism between the bordering States and the Royal Government of Bhutan (RGoB) to facilitate coordination on border management and other related matters.
•  Hydropower Cooperation- hydropower projects in Bhutan are an example of win-win cooperation, providing a reliable source of inexpensive and clean electricity to India, generating export revenue for Bhutan and cementing our economic integration. The most recent projects being the Punatsangchu I (1200 MW), Punatsangchu II (1020 MW), and Mangdechu (720 MW).
• The sale of hydropower accounts for the largest share of the country’s GDP. It is also the most important export item contributing about 40 percent of Bhutan’s total exports. India’s support in the development of the hydropower sector in Bhutan is the centrepiece of Bhutan-India economic cooperation and is one of the main pillars of bilateral cooperation.
• Water Resources- There is a Joint Group of Experts (JGE) on flood management between India and Bhutan to discuss/ assess the probable causes and effects of the recurring floods and erosion in the southern foothills of Bhutan and adjoining plains in India and to recommend appropriate measures to both Governments. 
• Educational and Cultural Cooperation A large number of college going Bhutanese students are studying in India. There are also various scholarships provided to the students like – Prestigious Nehru-Wangchuk Scholarship is being awarded to deserving and talented Bhutanese nationals to undertake studies in selected and premier Indian educational Institutions.
• India-Bhutan Foundation India- it was established in August 2003 during the visit of His Majesty (then Crown Prince) to India with the aim of enhancing people to people exchanges in focus areas like education, culture, scientific and technical research and environment protection.
• Nehru – Wangchuck Cultural Centre- there are vibrant cultural exchanges between the two countries. Nehru Wangchuck Cultural Centre in Thimphu is abuzz with cultural activities around the year. Regular classes for Indian classical music, tabla and yoga are being organized in this centre.
• Finally, Indian Community- there are about 60,000 Indian nationals living in Bhutan (floating population), employed mostly in the hydro-electric power and construction and road industry.

Conclusion:

• However, India should not take the relationship with Bhutan for granted. In the past few years, ties came under a strain over India’s sudden change in its power purchasing policy, rigid rates and refusal to allow Bhutan to join the national power grid and trade with third countries like Bangladesh.
• There are also other concerns like Bhutan’s worry that too much trade, transport and tourism from India could put its environment at risk.
• India’s plans for a Motor Vehicles Agreement (MVA) in the Bangladesh-Bhutan-India-Nepal grouping have been delayed.
• A Bhutanese proposal to levy entry charges on Indian tourists could cause differences.
• Also, earlier generations of Bhutanese students never looked beyond India, but in recent years young Bhutanese have shown a preference for education destinations in Australia, Singapore and Thailand.
• India also needs to remain alert to strategic powers which are trying to build closeness with Bhutan, as is evident from the high-level visits from China and the U.S.

• Bhutan’s glacial lakes pose a threat not only to Bhutan but also India, India needs to adopt adaptation strategies

Way ahead:

• Power Tariff agreements need to be renegotiated to give more space to Bhutan’s demand
• India needs to be more flexible when it comes to Bhutan’s sovereignty. Bhutanese need to be given more space in their diplomacy w.r.t Chinese
• In BBIN, India needs to adopt ASEAN’s Minus X formula and wait till Bhutan’s concerns are met
• Standby credit facility extended to Bhutan need to be reassessed as per current exchange rates and economic stability
• India can collaborate with Bhutan to open up an international financial services centre which will diversify Bhutan’s economy
• Bhutan’s glacial lakes pose a threat not only to Bhutan but also India, India needs to adopt adaptation strategies.
• India has recently amended rules to allow Bhutan to sale electricity to Bangladesh using Indian transmission grids which will be a game changer in bilateral relations.
• India and Bhutan ties are time tested ones. Both need to work together to build an economically integrated and culturally bonded Bilateral relationship.
• In a world of growing options, it remains in India’s and Bhutan’s best interests to make each other’s concerns a top priority.

 

 

Question – Is the U.S.-China trade war paving way for new protectionism? Explain(200 words)

Context – the trade war between the U.S. and China.

 

• The United States that had once been a champion of globalisation and liberal trade is increasingly turning away from its own agenda.
• It is aimed to stimulate domestic production and to reduce the country’s trade deficit.
• In the wake of this protectionist approach multiple countries have been targeted like rewriting the North American Free Trade Agreement with Canada and Mexico, but the prime focus of this trade and technology war has been China.

The development of this trade war:

• The development of this China-specific tariff aggression can be seen in a trail of developments.
• It began with the U.S. charging 25% tariff on certain goods manufactured in China whose total imports in the U.S. were worth $50 billion, out of the total goods that the U.S.imports from China. The total value of which is $540 billion in July 2018.
• Soon another set of items imported from China whose total worth was around $200 billion were subjected to an addition 10% tariff on what they were already paying.
• And later in May this year, this additional 10% was raised to 25% tariff.
• This month another set of items imported from China were charged to pay an additional tariff of 10% on what they were already paying. And there are fears that this may be raised to 25% gradually.
• China had responded at each step with raising the tariffs on goods manufactured in the U.S. being imported to China.
• So both the countries are engaged in this game of raising tariffs and counter tariffs. U.S. has also shut off its business relations with individual Chinese firms such as Huawei, on grounds of national security as it has alleged it of theft of intellectual property from U.S. firms.
• And it is also trying to influence its allies.

U.S. allegations:

• The U.S. states that the prime reason for raising tariffs on certain Chinese goods is the trade deficit that U.S. has in its trade with China. U.S. has a trade deficit with China of around $420 billion.
• U.S. claims that this trade deficit is the result of currency manipulation by the Chinese authorities where they deliberately allow their currency (yuan) to depreciate vis-a-vis the dollar to support its export.
• But what the U.S. fails to see is that even if it is facing a trade deficit at face value, there are U.S. based companies manufacturing in China , the worth of which was $222 billion in 2015.
• These figures are not calculated in trade deficit calculations. According to one estimate, more than half of the goods imported by the U.S. from China are manufactured by the U.S. companies based in China.
• That is, it simply means that the U.S. trade deficit with China is the result of the off-shoring associated with globalisation, rather than to Chinese policy favouring its own firms.

The result:

• Given the importance of China as a global manufacturing hub, this has led to disruptions in global value chains and production networks.
• De-globalisation may at present be a distant prospect, but the fact that the world’s leading superpower is willing to disrupt globalisation provides both an example and the justification to other governments that want to do so.
• The G-20 countries other than the U.S., have tried to persuade the U.S. to strengthen free trade and not go for this new protectionist policy. The International Monetary Fund, the World Trade Organisation and a host of other international institutions have warned of the dangers of the new protectionism.

conclusion:

• All point out that the tariff aggression by the U.S. is the result of a misguided administration.
• But given the rise of protectionist sentiments among the people all over the world, especially in the U.S., where the farmers along with U.S. industrial workers feel that they had been left behind in the neoliberal years and the elites in developed and developing countries alike captured all the benefits of growth and this increased inequality, leads to governments to adopt populist policies to stay in power.
• The idea that the benefits of whatever growth occurred under the neoliberal regime would trickle down to the poor and lower middle classes was shown to be false.
• This is not exclusive to the U.S., there is also the rise of “right-wing populism” in Europe which is the result of slow growth and rising unemployment. They share the same sentiments about globalisation.
• All this mixed with the rhetoric of anti-immigrant and racism is creating a toxic mix and giving rise to anti-globalisation sentiment and right-wing populism.

Way ahead:

• The global organisations have to take the lead and make people aware.