U.S. Trade Representative (USTR) Michael Froman and Indian Commerce and Industry Minister Nirmala Sitharaman will meet October 29 for the U.S.-India Trade Policy Forum in Washington, D.C., to examine and move forward our bilateral trade and investment relationship. There are many issues on the agenda, and manufacturers urge that today’s discussions lead to concrete reforms in ways that will grow commercial opportunities and lead to stronger respect for international standards. Read More
Members of Congress, policy experts, economists, and industry leaders gathered at the Newseum in downtown Washington, D.C., yesterday morning for a policy breakfast briefing event to examine an important question: “Is India Open For Business?” after the first year of the Modi government. Read More
USTR Gives India’s Weak IP Policies a Pass
India got a pass when the Office of the U.S. Trade Representative (USTR) dropped its out-of-cycle review of that country’s abysmal IP regime, which consistently ranks as one of the very worst in the world.
The NAM and its partners in the Alliance for Fair Trade with India have long called for concrete action to address the threat of India’s deteriorating intellectual property environment and other discriminatory policies to manufacturing and jobs in the United States. Read More
Since Indian Prime Minister Modi took office in May, he has encouraged investor optimism at home and abroad by vowing to open greater opportunities to trade with and manufacture in India. The Prime Minister has outlined several bold pro-growth economic reforms, including a promising “Digital India” initiative, and recently met with President Obama on enhancing trade and investment ties.
Unfortunately, Modi’s pro-growth messages have yet to be translated into concrete actions in the telecommunications sector. Read More
In his recent Independence Day speech, India’s Prime Minister Narendra Modi laid out his vision for a future driven by innovation and aimed at improving the lives of all Indians. To achieve a “Digital India”, his government plans to build the infrastructure necessary to ensure all Indians have access to essential public services and information.
It’s a critical focus and surely an inspiring signal to his constituents and international partners. After all, innovation is essential for the growth of any nation in the 21st century. By embracing the potential of technology, the people of India can connect and unite like never before. From improving access to education and embracing the diverse benefits of telemedicine, to increasing the country’s electronic manufacturing capabilities, even those living in the far remote expanses of rural India could benefit.
The Obama Administration was quick to praise Modi’s approach and to highlight opportunities for collaboration. In comments at the New York Foreign Press Center, U.S. Assistant Secretary of State for South and Central Asia Nisha Biswal expressed “a great deal of desire to look and see what we can do to create or stand up a infrastructure platform that would allow American companies to be able to focus their tools, their technologies, their capabilities around the priorities that have been identified by the Indian Government.”
Indeed, there is “a great deal of desire.” But translating Modi’s grand vision into reality will be difficult, and so far there’s been more talk than action. India continues to maintain discriminatory industrial policies that are blocking U.S. exports of the very information and communication technology products Modi will need to achieve a “Digital India.” Widespread copyright piracy and weak protection of intellectual property rights in India are discouraging innovation and investment.
While other countries are opening their markets and undertaking the kinds of legal and economic reforms necessary to build and sustain a modern digital economy, India is falling further behind. Between 2013 and 2014, India slipped ten places in the global innovation index and now ranks a disappointing 76th in the world. According to the 2014 World Economic Forum’s Global Enabling Trade Report, India’s trading regime ranks 96th out of 132 countries in terms of enabling trade.
Modi’s government is still in its early days, and manufacturers remain hopeful that positive progress can be achieved and that a promising bilateral commercial relationship can get back on track. If India’s new leadership is serious about taking the actions necessary to achieve their vision, the NAM and American businesses stand ready to work with them.
Less than two weeks after India took a hard and unexpected stance against a previously agreed upon WTO Trade Facilitation Agreement (TFA), the international community is still reeling and contemplating the possible repercussions. NAM President and CEO Jay Timmons recently outlined in a Wall Street Journal (WSJ) Asia op-ed the impact India’s decision to block an agreement that would have added an estimated $1 trillion boost to the global economy based on domestic concerns could have on global development:
Though India’s economic future was looking bright with the newly elected Indian Prime Minister Narendra Modi’s promise to improve India’s business environment, followed by Finance Minister Arun Jaitley’s budget speech confirming that India was ready to facilitate trade and cut through some of the country’s red tape, the nation’s actions to block this critical agreement have signaled business as usual.
Why? New Dehli says it is protecting its agricultural programs, but many WTO members are calling its bluff. Timmons believes that India is using the deal as leverage since the global agreement requires consensus from all WTO members to move forward.
“This high-stakes gamble risks hurting economic growth worldwide while calling into question India’s respect for its international commitments,” said Timmons in the piece. Even more disappointing is that a trade facilitation agreement would stand to support growth in developing countries the most.
The bottom line is that the agreement would have benefitted all countries working to grow their economies by lowering international transaction costs. India boasts the world’s third largest economy and missed an opportunity to emerge as a world leader in trade and to show the world that it is indeed “open for business.”
As Timmons referenced in the WSJ, India must realize, “a trade-facilitation agreement that delivers on its promise will require strong coordination and assistance from donor countries, international financial institutions, multilateral organizations and the private firms.” All nations will benefit from a more open trading system.
Thousands of U.S. firms trade and do business across the Asia-Pacific region and globally, resulting in the injection of much needed foreign investment into both developing and developed countries. The new Government of India is well aware of this benefit and has expressed public commitment to opening up its borders to international trade on behalf. It is time Prime Minister Modi makes good on those claims to turn the tide on protectionist trade policies and focuses on future opportunities to prove to the international community that India is a viable and worthy trade partner.
Read the full text of Timmon’s piece here.
This week, senior officials from the Office of the U.S. Trade Representative (USTR) are visiting India to continue discussions on various bilateral trade issues, including intellectual property (IP) rights. The talks are a precursor to a long-awaited India-US Trade Policy Forum scheduled to take place later in the year. They are a welcome opportunity to consider how both nations can benefit from stronger IP protection and enforcement.
India’s recent actions to block a WTO Trade Facilitation Agreement that could have added an estimated $1 trillion to the global economy raised serious concerns about Prime Minister Modi’s commitment to opening India’s market and incentivizing overseas investment. India’s actions dealt a particular blow to poor countries, which would have benefitted disproportionately from a trade facilitation deal. According to the OECD, full implementation would have reduced international transaction costs for low and lower middle income countries by up to 15 percent.
However, there’s still time for India’s new government to break from the protectionist policies of the past. The fact that dialogue between India and the United States is even taking place is a step in the right direction. And few steps would have a greater impact on promoting economic growth and jobs in India and repairing a damaged bilateral trade and investment relationship than reforming India’s patent regime and strengthening IP protection and enforcement.
India’s economic present and future depend on technology and creative industries. The Indian Software Product Industry Roundtable believes the country has the potential to build a US$ 100 billion software product industry by 2025. Bollywood is already the world’s largest film industry, and gross receipts have almost tripled since 2004. Yet by almost any measure, India’s climate for IP protection and enforcement consistently ranks among the very worst in the world.
According to the U.S. Chamber of Commerce, India’s IP environment ranks dead last among 25 industrialized and emerging economies measured against 30 factors that are indicative of IP regimes that foster growth and development. The country’s long track record of rampant copyright piracy and repeated steps to deny, revoke and compulsory license patents on innovative medicines have earned it a place on USTR’s Special 301 Priority Watch List for a record 26 straight years.
If Prime Minister Modi really wants India to be “open for business,” as he stated repeatedly on the campaign trail, then his government must put in place measures to protect new ideas and technologies – including bringing patent rules in line with global norms, reforming copyright laws to better protect creative industries and safeguarding confidential business information.
Implementing measures that strengthen IP protection and enforcement in India would be a welcome first step to improving trade relations with the US and would signal to the world that India is serious about becoming a global economic leader for years to come.
Manufacturers in the United States expect USTR to make a clear case for reform and real results leading to a more mutually beneficial trade and investment partnership this week. We hope India will listen.
Over 40 African heads of state and government are in Washington this week to discuss ways we can work together to promote economic growth and development in Africa.
But what if working together to open markets and reduce barriers in developing countries turns out to be the best way to promote growth in Africa? With industrialized countries in North America, Europe and elsewhere now largely open to African products, the continent’s greatest chance to drive future export growth may come from reducing high barriers in major developing country markets like India.
The U.S.-Africa Leaders Summit aims to promote economic growth and development by fostering stronger trade and investment ties. The United States has and can contribute much to that goal. Through the African Growth and Opportunity Act (AGOA), it has eliminated tariffs on substantially all African exports. Africa is home to some of the world’s fastest growing economies, and manufacturers in the United States are eager to invest and strengthen economic partnerships across the continent.
Yet overall, some 70 percent of tariffs developing country exporters face are applied by other developing countries, and the protectionist challenge is even greater in particular regions of the world. According to the World Bank, tariffs imposed by India and other South Asian countries on imports from developing countries are frequently five times as high as the rates imposed by industrial countries.
Reducing those tariffs is critical, the Bank says, because nearly 90 percent of the stimulus to developing country exports following past tariff cuts has come from liberalization by other developing countries.
Sadly for Africa, India and others in a position to lead in lowering barriers and contributing to growth and economic development are moving in the opposite direction. A Global Trade Alert study found G20 economies collectively imposed 692 protectionist measures between 2008 and 2010, and India and other emerging markets were among the biggest sinners. Many of those measures harmed the commercial interests of least developed countries – 70 percent of which are in Africa.
Just last week, India single-handedly thwarted a WTO deal that would have drastically cut the cost of moving goods across borders in Africa and around the world. According to the Peterson Institute of International Economics, a successful trade facilitation agreement would have added $1 trillion to the global economy.
Developing countries stood to gain the most. An OECD study found full implementation would have reduced international transaction costs for low and lower middle income countries in Africa and elsewhere by up to 15 percent.
Unfortunately, India seems bent on pursuing policies that are standing in the way of African exports and African development. This week, African countries and the United States have an opportunity to make common cause and to look at ways to work together to reduce trade barriers in India and other emerging markets.
With so much to gain from cooperation, we can’t afford to miss this chance.
This week, Secretary of State John Kerry and Secretary of Commerce Penny Pritzker travelled to India to participate in the 5th U.S.-India Strategic Dialogue with India’s External Affairs Minister Sushma Swaraj. While there, Kerry will also meet with Prime Minister Modi, marking the first Cabinet-level contact with India’s new leader and laying the groundwork for Modi’s visit to the United States in September.
Manufacturers in the United States have much to contribute to a more open Indian economy focused on jobs and growth. As Secretary Kerry noted in his remarks this week at an event hosted by the Center for American Progress, “American companies lead in exactly the key sectors where India wants to grow: in high-end manufacturing, in infrastructure, in healthcare, information technology, all of them vital to sort of leapfrogging stages of development so you can provide more faster to more people.”
Kerry spoke of the historic potential of this visit to reinvigorate a sometimes troubled bilateral trade and investment relationship and promote expanded dialogues that give India’s new government a chance to demonstrate its commitment to reform and a mutually beneficial trade and investment partnership. By breaking down barriers and leveling the playing field, India could not only increase trade and foreign investment, but also spur entrepreneurship and drive innovation among its own businesses and industries.
Renewed dialogues are a welcome step in the right direction. But whether or not these exchanges deliver progress and real results will depend on India. Will the new Modi government take steps to boost trade by abandoning forced localization policies and ensuring its trade policies conform to international norms? Will it work to encourage entrepreneurship and technological advancement by strengthening intellectual property protection and enforcement? Or will it let these opportunities slip by?
Over the past few months, the global business community has seen early developments in India that, if continued and expanded, have the potential to transform its economy and trade relationships with countries around the world. In his budget speech earlier this month, Indian Finance Minister Arun Jaitley spoke of incentivizing overseas investment and announced plans to raising foreign investment caps for defense and insurance to 49 percent.
But India’s actions to block progress on the WTO Trade Facilitation Agreement are a devastating step in the wrong direction – harming global growth and the trade potential of other developing markets. The OECD estimates that a successful trade facilitation deal would cut international transaction costs for low and middle income countries by as much as 15 percent. Recent decisions in India to deny patents and uphold compulsory licensing of cancer medicines have the troubling look and feel of business as usual.
During their visit to Delhi this week, the NAM urges Secretaries Kerry and Pritzker to squarely and frankly address outstanding bilateral trade and investment concerns that are preventing the U.S.-India economic and commercial relationship from achieving its full potential. India has much to gain in the bargain. As Kerry remarked earlier this week, “India’s willingness to support a rules-based trading order and fulfill its obligations will help to welcome greater investment from the United States and from elsewhere around the world.”
Will the Modi government seize this chance to show the work it is open for business? Manufacturers will be watching.
While there are many variables that factor into a country’s development, the ability for businesses and individuals to innovate is key to empowering economic growth and fostering opportunity. When countries like India embrace innovation, they can create new jobs, expand trade opportunities and strengthen international relations.
There is reason to hope that the government of newly elected Prime Minister Narendra Modi will improve the India’s innovation environment and reverse a worrying downward trend in the protection and enforcement of intellectual property rights. Case in point, India was ranked 76th in the annual Global Innovation Index (GII) Survey published earlier this week by Cornell University, INSEAD, and the World Intellectual Property Organisation. With a drop of 10 spots from last year, India was the worst performer among the BRICS nations and the only BRICS member that did not improve its position from last year.
Part of this drop in rankings is the result of protectionist policies that undermine international trade norms and unfairly prop up domestic markets by closing off markets to foreign competition. For example, India has implemented retail investment caps that require stores to purchase from Indian producers as well as domestic manufacturing requirements that mandate certain materials be manufactured within India. As a result of these harmful policies, this is the fourth consecutive year that India has dropped in the GII rankings.
Ultimately, these policies create barriers to cutting edge technologies and harm domestic companies by restricting innovators’ access to next generation technologies. Rather than creating false protections for domestic producers at its own economic expense, India should incentivize ingenuity and entrepreneurship by implementing policies that reward the invention and creativity of its citizens.
Manufacturers hope the Indian government will continue on a path toward productive trade negotiations that will ultimately lead to policies that incentivize innovation and foster creativity. We are ready to work with Indian businesses to share best practices and improve operations to grow economic opportunity and create jobs in both of our nations.