Trump urged to prioritise removal of trade barriers with India

Donald Trump and Narendra Modi
Donald Trump and Narendra Modi

Top US lawmakers have urged president Donald Trump to prioritise the elimination of trade and investment “barriers” by India during his upcoming meeting with India prime minister Narendra Modi, saying they “significantly harm” American businesses and workers.

The four lawmakers also claimed that India has imposed several new significant barriers that have harmed US producers across all sectors of the American economy, including services, manufacturing, and agriculture.

“We write to you ahead of the upcoming visit by prime minister Narendra Modi to urge you to prioritise the elimination of Indian trade and investment barriers that significantly harm American businesses and workers,” the lawmakers said.

The four lawmakers are – Senator Orrin Hatch, Chairman of the Senate Committee on Finance and Senator Ron Wyden, Ranking Member of the Senate Finance Committee, Congressman Kevin Brady, Chairman of the House Committee on Ways and Means and Congressman Richard Neal, Ranking Member of the House Committee on Ways and Means.

“While Indian businesses continue to benefit from open US markets, India has failed to eliminate, or even address concretely, multiple trade and investment barriers that have been the focus of recent bilateral and multilateral fora,” the letter said.

“At the same time, India has imposed several new significant barriers that have harmed US producers across all sectors of our economy, including services, manufacturing, and agriculture. prime minister Modi’s visit provides an opportunity once again to press India for results,” the lawmakers said in the letter dated June 23.

The lawmakers said that in recent years the US and India have sought to strengthen economic engagement through the bilateral Strategic and Commercial Dialogue and the Trade Policy Forum (TPF).

“Yet these high-level discussions have not resulted in the elimination of major trade and investment barriers or even deterred India from imposing new barriers. Many sectors of the Indian economy remain highly and unjustifiably protected, and India continues to be a difficult place for American companies to do business,” they wrote.

This reality is buttressed by the results of the 2017 edition of the World Bank’s Doing Business report, which ranks India 130 out of 190 countries, the lowest ranking for any G- 20 country -for ease of doing business, they noted.

Noting that India remains an important bilateral trade and investment partner for the US, the lawmakers said the two countries are now have the largest bilateral trade and investment flows ever recorded in their relationship.

“Nevertheless, as a result of India’s persistent failure to enact market-based reforms and resolve significant and discriminatory impediments to trade and investment, the US- India economic relationship severely underperforms. Bilateral trade and investment is small considering the size of the countries’ economies and the scale of the potential relationship -India accounts for less than two per cent of total US exports of goods and services and less than one percent of the stock of US overseas investment,” they said.

The letter says that the US International Trade Commission determined in a 2014 report that “(i) tariff and investment restrictions were fully eliminated [by India] and standards of IP protection were made comparable to US and Western European levels, US exports to India would rise by two-thirds, and US investment in India would roughly double”.

Consumers, businesses, and workers in both the US and India could gain enormously from enhanced bilateral trade and investment.

But achieving the full potential of this relationship requires the actual removal of India’s economic barriers, they said.

“These barriers are prevalent in multiple sectors and include high tariffs, inadequate protection of intellectual property rights (IPR), inconsistent and nontransparent licensing and regulatory practices, and various other restrictions,” the lawmakers said.

Regarding IPR protection, the four Congressmen said they continue to have concerns about India’s system for providing protection for patents, trademarks, and copyrights.

“India’s weak standards and insufficient enforcement remain an area of concern for US right holders, including with respect to pharmaceutical patents and in the area of copyright protection, where we understand that India has not enacted meaningful laws to prevent cam cording in cinemas, which has led to rampant infringement,” they wrote.

With regard to India’s licensing and regulatory practices, discriminatory determinations and inconsistent and nontransparent approval processes have hampered US trade and investment, they alleged.

For example, India maintains a variety of forced localisation measures on solar and information technology products and enforces duplicative in-country security testing requirements for telecommunications equipment, the letter noted.

Other regulatory barriers include unnecessarily slow and opaque approval processes for biotechnology products; sanitary and phytosanitary standards that appear to be non-science based; burdensome import and customs procedures; significant limitations on foreign participation in professional services; and restrictive foreign equity caps for financial, retail, and other major services sectors.

In a statement, Patrick Kilbride, Vice President of International Intellectual Property, Global Intellectual Property Center said from the halls of the Congress to the Trump administration, US leaders have placed an emphasis on ensuring American innovation is respected abroad.

“In India, that includes strengthening IP standards to address issues with patentability, computer-related inventions, and copyright infringement. Prime Minister Modi’s visit presents an opportunity to revisit these issues and renew India s commitment to policies that will benefit both American and Indian innovators,” Kilbride said.