While taking care not to precipitate a new crisis by designating India as a “Priority Foreign Country” for intellectual property violations, the United States is clearly counting on the new government that takes office later this month for a speedy resolution of thorny trade issues between the two countries.
“The election of a new government in India provides an ideal opportunity to turn areas of contention into areas of collaboration,” US Trade Representative Michael Froman said.
The prospect of a Narendra Modi government, widely seen abroad as a business-friendly administrator, is one critical factor that is believed to have weighed with the Obama administration as it resisted the intense pressure of domestic business lobbies to designate India.
Independent experts have welcomed Washington’s decision to maintain status quo on the highly-contentious IPR issue at a time when bilateral ties have just about recovered after a prolonged diplomatic spat over the Devyani Khobragade affair.
With all eyes on USTR’s course of action vis-à-vis India, Froman wrote a whole blog to explain his decision to maintain status quo by keeping India on the Priority Watch list, instead of its punitive designation as a Priority Foreign Country, with attendant consequences of trade sanctions.
Turning to India’s alleged violations of pharmaceutical patents, regarded as the issue central to the current trade row, Froman said his office shares the heightened concerns of US industry and other stakeholders about the “deterioration in India’s environment for IP protection and enforcement”.
At the same time, he hinted at a measure of accommodation for the Indian standpoint, stating: “The United States recognizes the public health challenges that India faces, and looks forward to working with the Indian government to identify the range of ways in which these challenges can be addressed, including by adopting policies that support the innovation of life-saving medications and address obstacles its population faces in accessing quality health care.”
About the intent to turn from contention to collaboration, Froman commented: “The remarkable history of this bilateral relationship in just the last twenty years tells us that this is not only possible, but essential if the world’s two largest democracies are to demonstrate successfully the “defining partnership” that President Obama identified as a key feature of this century.”
The USTR, however, affirmed the decision to conduct “an Out-of-Cycle Review” on India’s environment for IP protection and enforcement later this year.
Some US lawmakers, however, want the Obama administration to deal more firmly with India. Republican Senator Orrin Hatch, who along with three other top lawmakers ordered an investigation into India’s trade policies last year, termed India a “textbook example” of poor practices relating to intellectual property. “A stronger response is required to dissuade other countries from adopting similar policies,” he said in a statement.
But independent experts lauded the USTR for taking a “sensible decision”. Noted economist Arvind Subramanian from the Peterson Institute for International Economics termed it “a good constructive signal from the US that it wants to start with the new government without the baggage (or with as little baggage as possible) from the past”.
The US India Business Council sought a “constructive dialogue” on the IPR issue between industry and the Governments of the United States and India. “Do we have concerns regarding IPR in IndiaIJ Yes. Going forward, is acrimony the answerIJ Absolutely not,” said USIBC’s Acting President Diane Farrell.
The US Chamber of Commerce, supporting the decision on “out-of-cycle” review, said: “We hope that this step will generate much needed dialogue for the US and Indian governments to address the concerns identified in the report. We look forward to working with the next government of India to promote a robust IP climate.”