Trade commission begins hearings on India
As the US International Trade Commission began its hearings on India’s trade, investment and industrial policies, a leading bilateral business group has urged Washington to avoid “unnecessary steps” that would imperil US-India economic relations. The US India Business Council, in its submission, has simultaneously called upon New Delhi to take steps to give the US better access to India’s economy by improving infrastructure and creating “a regulatory environment that rewards and protects intellectual property”.
“These and other issues can and must be resolved through ongoing cooperation and dialogue,” said Ron Somers, president of the USIBC, a body that has more than 350 top US and Indian companies as its members. Noted economist Arvind Subramanian of the Peterson Institute for International Economics in Washington also pointed out that the trade frictions obscure how rapid and robust integration has been occurring between the two countries in recent years – not just in goods, but in services and foreign direct investment as well. “This integration has not come at the expense of US employment,” he said, in response to a major American concern.
American industry’s complaints of India’s weak intellectual property protection regime and its domestic content requirements for foreign investors in certain sectors are at the core of the trade commission hearings, launched last year at the bidding of the US Congress. The commission’s hearings come close on the heels of the US Trade Representative’s decision to move the World Trade Organisation against India’s local content requirements in the solar energy sector – a course that has irked New Delhi.
After this week’s hearings in Washington on the impact of the Indian policies on the US economy, the trade commission’s members plan to make two visits to New Delhi over the next couple of months to hold consultations with Indian officials. The commission is due to submit its report by November. In a written submission ahead of his formal testimony on Friday, Somers called upon the two countries to overcome challenges and strengthen their partnership. “This will pave the way for the world’s two largest free-market democracies to shape the destiny of the 21st Century – for the better,” he said.
To the numerous detractors on the American side, Somers has sought to make the case that India’s “size, economic prominence, geopolitical influence and shared values with America make it an indispensable ally”, so all policy discussions about India should operate from that understanding. Despite the complaints of American policymakers, lawmakers and companies, it has been pointed out that since President George W. Bush’s India visit in 2006, the US-India two-way trade has grown from just $25 billion to more than $100 billion now.
The growth of India’s civil aviation industry has been a major boon for US manufacturers. “Entire fleets of India’s new private aviation industry rely wholly on US exports and content, creating literally hundreds of thousands of jobs here in the United States,” Somers said, noting that this is just one of many success stories related to the engagement with India, another being its thriving telecom sector.
Subramanian, in his testimony on Wednesday, took the stand that India’s overall integration was proceeding rapidly. “The concern that India has systematically turned protectionist in the last few years is belied by the inventory of actual policy changes,” he said, but at the same time felt that “the Indian regulatory regime has become more uncertain and arbitrary in a manner affecting both foreign and domestic investors”.