Over the past few weeks, the trade war between the U.S. and China has seen a significant escalation. On August 20, the U.S. administration notified its decision to impose 15% tariffs, in two phases, on imports valued at $300 billion. The latest round of tariff increases implies that the country has imposed tariffs on almost all of its product imports from China, totalling nearly $540 billion in 2018. Pharmaceutical imports are the only major exception.
Immediately after the U.S. administration issued the notification, China announced additional tariffs on more than 5,000 products imported from the U.S. valued at $75 billion. The sensitive sectors of agriculture and forestry were targeted. Tariffs were also hiked for the first time on crude oil.
On September 2, China raised the ante further by initiating a dispute in the World Trade Organization (WTO) against the U.S.’s unilateral tariff increases.
Earlier, the U.S. administration had targeted China primarily for what it perceived to be violations by the latter of intellectual property rights (IPRs) of American companies. The administration’s argument was that Beijing was forcing these companies to transfer their proprietary technologies. In fact, on this issue, the U.S. became the judge and the jury by indicting China for indulging in “forced technology transfer” and then bringing penal provisions against its imports using the provisions of the Trade Act of 1974. The provisions of this Act (like Section 301) allow the U.S. to “investigate” any country which, in its opinion, has violated IPRs of American companies. If found “guilty”, the violating countries can be sanctioned with trade retaliation. The tariff increases against Chinese products were tantamount to trade retaliation. It needs to be further mentioned here that Section 301 actions are a violation of WTO rules as disputes must be resolved by the organisation’s dispute settlement mechanism.
Currency manipulator’ label
However, while triggering the most recent escalation, the U.S. administration not only violated the spirit of multilateralism, it also shifted the goalposts. This time, the action was triggered when the U.S. Secretary of Treasury, Steven Mnuchin, invoked the provisions of Section 3004 of the Omnibus Trade and Competitiveness Act. This Section authorises the Treasury Secretary to examine whether the U.S.’s trade partners are manipulating the “rate of exchange for purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade”.
Earlier, Mr. Mnuchin had in August called the U.S.’s largest trade partner a “currency manipulator”, the first time Washington used the label against any country since 1994. Mr. Mnuchin’s determination was based on a report presented to the U.S. Congress last year that concluded that China’s “exchange rate practices continue to lack transparency, including its intervention in foreign exchange markets”, although it found that “direct intervention in foreign exchange markets by the People’s Bank of China” over the past several months was limited. Beijing was targeted for the “long history of facilitating an undervalued currency through protracted, large-scale intervention in the foreign exchange market,” said the Department of Treasury.
The latest action by the Trump administration raises at least two sets of issues. The first concerns its pursuit of unilateralism, an anathema in the post-War economic governance framework underlined by the principles of multilateralism. Since the coming of the Trump Administration, the U.S. has repeatedly undermined these principles. The country has challenged the framework of multilaterally agreed rules in two ways
first by not allowing WTO members to conduct negotiations so that the rules respond to the needs of the members, especially the lesser developed countries; and second, by making the dispute settlement mechanism non-functional. A critical component of the dispute settlement mechanism is the Appellate Body, which needs seven members to function effectively. But the U.S. administration has refused to allow retiring members of the Appellate Body to be replaced by new members, and this has brought the dispute settlement mechanism to the brink.
Second, nearly a year and a half after the trade war was officially announced in Washington, one question that begs an answer is: Have the American people gained anything from the exertions of the administration? Are there any signs that President Trump’s vision of ‘Making America Great Again’ is gaining further traction?
Small impact on trade deficit
We will consider the pattern of trade flows over the past year to see if tariffs were able to reduce U.S.’s dependence on China. In 2018, almost nine months of which saw the trade war playing out, the U.S.’s trade deficit vis-à-vis China reached a record high of over $419 billion, nearly 12% higher than that in the previous year and the steepest increase since 2010. In the last five months of 2018, when the tariffs were introduced by both countries, the trade deficit was $196 billion, 15% higher than that in the corresponding period in 2017. In other words, the tariffs did not reduce the deficit.
In the first half of the current year, the U.S.’s trade deficit reduced by about 10% and while imports from China declined by $31 billion, exports to China also declined by $12 billion. Thus, the U.S. was not left untouched by the trade war.
There is hardly any doubt that the latest round of tariff increases would hurt the U.S. economy even more since China has targeted agriculture and crude oil, two of the most sensitive sectors. An impact on these sectors could adversely affect President Trump politically because people and companies associated with these areas are among the President’s major funders. Further, since the current round of tariffs target products like garments, toothbrushes, footwear, toys and video games, the U.S.’s consumer goods markets would be impacted quite considerably. Clearly, the administration is worried about the price increases following the imposition of tariffs on some of these goods, a reason it has postponed the tariff increases until after the Christmas purchases.
The timing of the latest escalation could not have been worse; it could bring the global economy closer to an economic slowdown, much earlier than its predicted onset in 2020.
What is special about Japan in the context of health-care services is that it managed to contain the cloutof specialists in its health-care system and accorded a prominent voice to its primary care practitioners (PCP) in its decision-making processes.
Hospitals, for the early part of Japan’s history with modern medicine, catered only to an affluent few. The government limited the funding of hospitals, restricting them to functions like training of medical students and isolation of infectious cases. Reciprocal connections between doctors in private clinics and hospitals were forbidden, thwarting the possibility of the two groups creating a strong nexus; on the other hand, a sturdy lobby of clinic-based PCPs evolved to tip the balance in favour of primary health care.
The Japanese Social Health Insurance was implemented in 1927, and the Japanese Medical Association (JMA), then dominated by PCPs, was the main player in negotiating the fee schedule.
In India, on the contrary, a hospital-oriented, technocentric model of health care took early roots. Building urban hospitals through public investment enjoyed primacy over strengthening community-based, primary health care. Alongside this, a private sector with rampant, unregulated dual-practice system (doctors practicing in both public and private sectors simultaneously) flourished. This allowed doctors to constitute a powerful group held together by coherent interests. This influential doctors’ community, which saw a lucrative future in super-specialty medicine, buttressed the technocentric approach, which also happened to concur with the tastes of the affluent and the middle class. This trajectory of events has had an enormous impact on the present-day Indian health care.
Focus on hospitalization
While the well-to-do section has always rooted for ‘high-tech’ medical care, this preference has now trickled down to even the subaltern section, which lacks the wherewithal to pay for such interventions. Colossal health insurance schemes like Ayushman Bharat that harp on providing insurance to the poor largely for private hospitalisation — when the most impoverishing expenses are incurred on basic medical care — are at least partly influenced by the passionate popular demand for the so-called high-quality medical care and bespeak the deformity in the health-care system today.
The way this has affected medical manpower and its dynamics also warrants attention. It took 37 years after the landmark Bhore Committee report (1946), which highlighted the need for a ‘social physician’ as a key player in India’s health system, to finally recognize family medicine as a separate speciality — and another decade and a half to actuate a postgraduate residency in family medicine.
The highest professional body representing doctors in this country, the Medical Council of India (MCI), itself came to be dominated by specialists with no representation from primary care. There is a proposal to replace the MCI with a National Medical Commission (NMC) but the situation is unlikely to be much different with the new organization.
The current opposition to training mid-level providers under the NMC Act 2019 is another example of how the present power structure is inimical to primary health care. Despite the presence of evidence proving that practitioners of modern medicine (say medical assistants) trained through short-term courses, like those of a 2- 3 year duration, can greatly help in providing primary health care to the rural population, any such proposal in India gets robustly opposed by the orthodox allopathic community. Proposals to train practitioners of indigenous systems of medicine, like Ayurveda, in modern medicine are also met with similar opposition.
Such medical assistants, and non-allopathic practitioners, have time and again been written-off as ‘half-baked quacks’ who would only endanger the health of the rural masses. Such criticism ignores the fact that nations like the U.K. and the U.S. are consistently training paramedics and nurses to become physician assistants or associates through two-year courses in modern medicine.
Examples of U.K., Japan
Many countries, including the U.K. and Japan, have found a way around this by generously incentivizing general practitioners (GPs) in both pecuniary and non-pecuniary terms, and scrupulously designing a system that strongly favours primary health care. What this careful nurturing has meant is that while a community of professionals in our part of the world has thwarted positive change, professionals of the same community in these countries have helped defend that very positive change.
Three broad takeaways emerge. One, it is imperative to actively begin reclaiming health from the ivory towers called ‘hospitals’. This could help in gradually changing the expectations of the layman and reversing the aspirations of medical professionals from being unduly oriented towards high-tech, super-specialty care. Given the current trends, however, this looks like a farfetched possibility.
Two, we need to find a way to adequately empower and ennoble PCPs and give them a prominent voice in our decision-making processes pertaining to health care. This can create a bastion of primary health care professionals who can then fight to keep their enclave unscathed. Three, a gate-keeping system is needed, and no one should be allowed to bypass the primary doctor to directly reach the specialist, unless situations such as emergencies so warrant. It is only because of such a system that general practitioners and primary health care have been able to thrive in U.K.’s health system. In view of the current resurgence of interest in comprehensive primary health care in India, one earnestly hopes that these key lessons will be remembered.
The automobile industry is notoriously cyclical. It is also a lead indicator for economic growth. And it has been in a tizzy since this time last year when the signs of an impending slowdown were first seen. Sure enough, the decline began in the last quarter of calendar year 2018 and intensified with the passage of every month in 2019.
So, if the industry goes through cycles of ups and downs, is the current slowdown something to worry about seriously? Yes, indeed. Are auto manufacturers heading towards an apocalypse? No, certainly not. So, why do we need to worry about this slowdown? Simply because the current downturn is like nothing that the industry has seen in a long, long time in terms of depth, scale and character.
So, what’s different this time? First, every segment of the auto industry, beginning from two-wheelers to passenger cars, light commercial vehicles and heavy commercial vehicles, and even tractors, has been hit. The downturn this time is all-encompassing.
Second, what was a natural, cyclical downturn has been amplified by extraordinary circumstances unleashed by reform measures that may have been well-meaning but have come back to bite the government.
Finally, an unthinking approach to a critical policymaking area such as electric vehicles has only intensified and prolonged the slowdown. Yes, key Ministers are now scrambling to contain the damage by retracting some of their earlier statements and reassuring the industry that the electric motor will not be privileged over the internal combustion engine but it has come too late.
Revision in axle-load norms
Let’s take the case of the commercial vehicles (CV) industry. In July 2018, the government revised axleload norms (for the first time since 1983) for cargo carriers by between 12% and 25%. The idea was to legalise over-loading, which is common practice, and help reduce freight costs for both consignors and consignees.
But by applying the higher cargo rules to all trucks on the roads, instead of only trucks to be produced after a given date, the government, in one stroke, raised existing carrying capacity by up to a quarter, forcing per-tonne freight rates down. This at a time when carrying capacity was already increasing due to the introduction of the Goods and Services Tax (GST), which helped in quicker turnaround of trucks. Operators were able to keep the trucks gainfully deployed for 25% more days in a month than before.
These two reform measures only served to advance the cyclical slowdown which was on its way. The CV industry has a well-earned reputation for sharp practices such as steep-price discounting and dealer dumping by vehicle manufacturers. Like elephants that spray their own heads with sand, vehicle manufacturers — CVs and cars — have honed into a fine art the practice of clogging the pipeline by over-producing vehicles without a care for demand, and dumping them on dealers to sell.
This became a particularly painful issue because of the approaching deadline for the transition to BS-VI norms from April 1, 2020. Dealers are saddled with inventory of BS-IV vehicles that they need to clear out before the deadline. For the manufacturers, the problem is that they’re unable to plan their production schedules for BS-VI vehicles as freight operators are watching the fun from the sidelines. They’re waiting for the steep discounts that are bound to come by as the deadline nears and are not in a hurry anyway to add new trucks given the slowdown in goods movement.
If it was a deadly cocktail that consumed the CV industry, in the case of cars, it appears to be one of model fatigue. Between Maruti and Hyundai, the two big players that account for two-thirds of the industry, there have been hardly any exciting new launches in the last one year. There have been facelifts and limited editions of existing models but the two biggies have not ventured into launching fresh models, at least until very recently.
The model-fatigue theory is proved by the response that two new kids on the block — the Kia Seltos and the MG Hector — received. Though they’re not mass-market cars and are priced considerably higher than the median range, the two models have attracted bookings in excess of 30,000 units each in what is supposedly a depressed market. Maruti and Hyundai have clearly been caught sleeping at the wheel.
The onset of festival season sales and the impact of recent measures by the government may help the cycle play itself out soon but is there something that the government can do to quicken the turnaround? Of course, yes. Should it reduce GST on automobiles from 28% to 18% as per the demand of the industry? Yes, it should, but not for all vehicles.
The government should consider dropping GST only for BS-IV vehicles — CVs, cars and two-wheelers — that are now idling in stockyards of vehicle manufacturers and dealers. It should consider a scheme where all BS-IV vehicles sold until March 31 will suffer only an 18% GST. For the industry, this will help clear the clogged pipeline and for the government, it will help contain the fallout on its revenue as the lower rate will apply only on a limited stock and until a specified time.
A quick GST Council meeting by video conference should be called right away instead of waiting for September 20 when it’s slated to next meet. Prospective buyers, of cars as much as CVs, are delaying their decision as the word is out that the government may consider a tax cut. If rates are to be cut anyway, it makes sense to do it immediately. Two weeks can make a huge difference to an industry writhing in agony.
Indus Valley settlers had a distinct genetic lineage’
Genome shows no Steppe pastoralist or Iranian farmer link
Throwing fresh light on the Indus Valley Civilisation, a study of DNA from skeletal remains excavated from the Harappan cemetery at Rakhigarhi argues that the hunter-gatherers of South Asia, who then became a settled people, have an independent origin. The researchers who conducted the study contend that the theory of the Harappans having Steppe pastoral or ancient Iranian farmer ancestry thus stands refuted. The finding also negates the hypothesis about mass migration during Harappan times from outside South Asia, they argue.
Vasant Shinde, the professor who headed the Rakhigarhi Project, said on Friday that researchers had successfully sequenced the first genome of an individual from Harappa and combining it with archaeological data, found that hunter-gatherers of South Asia had an independent origin, and authored the settled way of life in this part of the world.
“They do not contain genome from either the Steppe region or ancient Iranian farmers. The genetic continuity from hunter gatherer to modern times is visible in the DNA results,” Prof. Shinde, affiliated to the Department of Archaeology, Deccan College Post-Graduate and Research Institute, Pune, said.
The study, he said, finds that the same hunter-gatherer communities developed into agricultural communities and formed the Harappan civilisation.
The researchers also suggest that there was a movement of people from east to west as the Harappan people’s presence is evident at sites like Gonur in Turkmenistan and Sahr-i-Sokhta in Iran.
“As the Harappans traded with Mesopotamia, Egypt, the Persian Gulf and almost all across South Asia, there was bound to be movement of people, resulting in a mixed genetic history. India had a heterogeneous population right from the beginning of settled life,” Prof. Shinde said. There was a hint that settled life and domestication went from South Asia to West Asia.
The Rakhigarhi study was reported in a paper titled “An Ancient Harappan Genome Lacks Ancestry from Steppe Pastoralists or Iranian farmers” in the journal Cell on Thursday.
Origins of farming
In Europe, ancient-DNA studies have shown that agriculture tended to spread through an influx of people with ancestry in Anatolia, in modern day Turkey.
The new study shows a similar dynamic in Iran and Turan (southern Central Asia), where the researchers found that Anatolian-related ancestry and farming arrived around the same time. In South Asia, however, the story appears quite different. The researchers found an absence of Anatolian-related ancestry.
The apex body for child rights, NCPCR, is visiting 117 Aspirational Districts to hold public meetings on complaints affecting children pertaining to education, health and nutrition as well as lack of infrastructure. The National Commission for Protection of Child Rights (NCPCR) has so far held 23 benches in 27 districts and has received nearly 5,000 complaints. The districts visited so far include Adilabad (Telangana), Ramanathpuram (Tamil Nadu), Chamba (Himachal Pradesh), and Mewat (Haryana).
“The Aspirational District Programme focuses on five main themes to improve socio-economic status which include Health and Nutrition, Education, Agriculture and Water Resources, Financial Inclusion and Skill Development. Of these, three issues come directly under our mandate and account for 70% of the total weightage for ranking districts. So we have been holding our benches where we meet officials from nearly 30 departments as well as local residents,” NCPCR Chairperson Priyanka Kanoongo told The Hindu.
The NCPCR will also set up two cells at its headquarters here to monitor compliance of laws governing child rights for the Union Territories of Jammu and Kashmir and Ladakh after the dilution of Section 370.
The complaints pertain to construction of access roads for schools, providing benefits under the Ayushman Bharat programme for disabled children, provision for toilets, among others. Complainants are supposed to give a written submission, which is then taken up by a bench comprising Members of the NCPCR.