A recent article of mine published in my column on labor for Georgetown Politics publication On the Record: https://ontherecordgu.com/jiyons-column-global-labor-politics/2023/10/18/bidenomics-meets-modinomics-what-india-us-relations-mean-for-labor
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JIYON CHATTERJEE: In a world of high-stakes international conferences, the recent G20 summit hosted in New Delhi on September 9th may seem siloed from the daily concerns of ordinary people. But beneath the diplomatic veneer, the summit symbolized a pivotal shift in global economics with profound implications for workers across borders, driven by the unlikely partnership of President Joe Biden and Prime Minister Narendra Modi.
Leaving aside the fact that the most important issues facing swathes of people today—such as climate change, food security, and immigration—are inherently global in nature, the technicalities of geopolitics have broad immediate ramifications for international labor, especially in regard to trade. One stroke of a pen can usher in paradigm shifts in global economic agendas, directly impacting the jobs, wages, and rights of workers across borders and occupational sectors. The recent G20 summit was representative of one such change for global economics.
The 19 nation-state members in the “Group of 20” compose approximately 80 percent of the global economy. Of these countries, India and the United States played central roles at the recent G20 conference—the former as an emerging leader of the Global South, and the latter as an established economic powerhouse undergoing a significant transition in its trade outlook.
Their leaders could not be more different. Indian Prime Minister Narendra Modi is known as a dynamic orator with high approval ratings, having won two landslide general election victories for his right-wing Hindu nationalist party. U.S. President Joe Biden, in contrast, is a less convincing communicator who has struggled to weather the inflationary woes of the post-COVID economy, suffering from low public approval while leading a political party that sees itself as a bastion of democratic liberalism. Yet these two leaders have brought the U.S.-India relationship into an unprecedented period of alignment, cementing populist sentiments of their domestic platform into the concrete action plan of the international establishment. Bidenomics and Modinomics have shaken hands, with real consequences for members of their respective national labor bases.
President Biden has pursued a double-pronged approach to economic policy. Firstly, he has altered U.S. trade policy from a primarily consumer-oriented agenda towards a worker-centered approach, prioritizing the revitalization of American industry over low prices. Secondly, his administration has worked with international financial institutions to make big infrastructure investments in the developing world, instead of pursuing the previous policy of forcing poorer nations to adopt strict austerity measures. Both elements of his agenda are intended to counter the ever-increasing influence of China, which has asserted itself in international trade with a strong manufacturing base and heavy investment in the Global South through its Belt and Road Initiative.
One industry that the United States has identified as crucial in its strategic competition with China is the burgeoning market for semiconductors, often referred to as “the oil of the future” for their myriad applications in clean energy, artificial intelligence, national defense technology, and practically all branches of modern electronics. Biden’s landmark CHIPS and Science Act of 2022 intends to cement the United States as a leading semiconductor manufacturer, marshaling billions of public and private sector dollars towards this goal. Yet there remains a big issue for the American government: semiconductor supply chains are still largely dependent on Chinese-manufactured inputs. If the U.S. wants to beat China, it needs to turn to other suppliers.
This is where India comes in. Having overtaken China this year as the world’s most populous country, India doesn’t only have a raw numbers advantage over its regional rival; unlike China, India’s population demographics skew towards its younger, working-age citizenry. This uniquely positions the country to fill America’s desire for supply chain diversification. In his June 2023 state visit to the U.S., Prime Minister Modi floated interest in India regaining its status as a member of the U.S. Generalized System of Preferences (GSP), a trade program that removes duties on several key goods from developing countries that often benefit U.S. manufacturing. More demand from the U.S. signals an opportunity for more new jobs in India, which has been suffering from sluggish job growth for many years under the Modi government.
More trade, however, doesn’t equate to fair trade. Growth in new sectors is exciting, but existing sectors have to be considered as well. Though the U.S. is India’s largest trading partner, the two have traditionally had a testy relationship at the World Trade Organization, where America has either formally complained about or vocally opposed various Indian tariffs and subsidies meant to prefer its agricultural sector over imports. Agriculture dominates the Indian economy, with farm workers accounting for about 45.5% of the Indian labor force. A closer relationship with the United States, through acceptance into a program like the GSP, would likely come with various strings attached. After recent talks, India has agreed to lift various tariffs on several agricultural products from the U.S., including chickpeas and lentils. India leads in global production for both legumes. Who knows what might be next on the chopping block in order to appease the United States—even Indian farm subsidies could be eyed.
That example leads directly into a second concern for Indian workers: Biden’s pro-labor agenda for America’s workers could harm India’s economic interests. The tariffs recently lifted by India were in fact initially in place as retaliation against U.S. steel tariffs imposed by the administration of President Donald Trump, who aimed to revitalize American steel production. Biden has not, in fact, reversed Trump’s steel tariffs, because they aid the current president’s domestic industrial policy. This means India has been effectively pushed into dropping key agricultural tariffs against the U.S. while still having to pay duties when exporting steel to America. India is one of the world’s top 10 exporters of steel—the United States is not.
Finally, as with many opportunities for increased trade, the possibility of a “race-to-the-bottom” situation for labor rights remains a worry. To rise to the occasion of becoming America’s leading alternative to China, India has already started making various moves to attract international investment in tech-related manufacturing. A key part of that effort is increasing factory productivity. After lobbying from Apple and its contract manufacturer Foxconn, the Indian state of Karnataka passed a law lengthening factory work schedules from nine to 12 hours a day. Foxconn is scheduled to open a factory in Karnataka and, with the new law, would be able to operate with the 12-hour production shifts characteristic of its facilities in China. The new policy has faced intense pushback from strong labor unions in India, but it remains to be seen whether India’s need for more international investment will outweigh its domestic labor anxieties.
As they shook hands at the G20 summit, Biden and Modi symbolized the developed world’s increasing intent to closely cooperate with emerging economies. But they will still have to deal with paradoxes of their own. If Biden wants to turn away from the exploitative relationship of the past between richer and poorer economies, can he do so while still serving U.S. interests? If Modi wants to corner his own piece of a new manufacturing opportunity and remain competitive with China, can he accomplish it while maintaining Indian labor standards? Where is the balance between more jobs and workers’ rights? The U.S.-India trade relationship remains imperfect. Faced with difficult questions and real people on the line, trade negotiators have their work cut out for them as they navigate this new economic landscape.
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