By Linda Dempsey & Patrick Kilbride
September 23, 2015 at 5:00 am ET
Top government officials from India and the United States gathered in Washington for the countries’ first Strategic and Commercial Dialogue (S&CD) yesterday. The talks centered on the lofty goal of boosting bilateral trade by more than five times to $500 billion, which, if successful, would move India closer to the level of trade of the United States’ major trading partners: Canada, China and Mexico. Increased trade would create growth and commercial benefits in both economies and help move India’s own economy forward.
The agreement to expand the traditional strategic dialogue to include commercial and economic issues is a positive step that presented another opportunity to strengthen bilateral trade and investment opportunities between our two democracies. The U.S. business and manufacturing community urges, however, that increased high-level talks and the upcoming meeting between President Obama and Prime Minister Modi should also translate to concrete trade reforms that will create a more reciprocal and open U.S.–India commercial relationship, providing a level playing field for manufacturers, service providers and other innovators in the United States.
While the 10th-largest economy in the world, India does not even break the top 15 for destinations for U.S. exports and continues to maintain barriers that impede the “open for business” goal of its prime minister. It maintains high tariffs and continues to increase them, impeding not only U.S. exports but India’s own participation in global supply chains. India continues to make much use of forced localization barriers and puts in place its own standards and testing, rather than relying on internationally accepted methodologies in areas as diverse as information technology to food products. And its protections for innovative industries fall short of global benchmarks. Together, these and other barriers limit India’s trade and investment potential and its commercial relationship with the United States.
Opening its economy, adopting international standards and undertaking standards of protection needed to be an innovation-driven economy would provide significant benefits not only to the United States but also to the Indian economy and Indian job creators. For instance, last year, the U.S. International Trade Commission found that U.S. exports to India would increase by two-thirds and U.S. investment in India would double if India implements trade policies to address these ongoing issues.
Indian leaders rightly emphasize the importance of creating an innovative economy from manufacturing to services, but they have yet to take steps to put India in line with the rest of the world. U.S. industries are ready and eager to invest; indeed, many already do in the hope that the “open for business” slogan will soon become a reality. Yet, the barriers to trade and investment remain high, particularly for the innovative manufacturing and services industries that India seeks to attract the most.
The high-level meetings between U.S. and Indian leaders this week and next provide a starting point to changing many of these and other barriers to trade and investment. In the words of Commerce Secretary Penny Pritzker, who co-chaired the S&CD with Secretary of State John Kerry, the goal must be to produce concrete results “to ensure that the United States and Indian businesses—small, medium and large—are in a position to capitalize on abundant opportunities that exist in both of our countries.” U.S. industries of all sizes and in diverse sectors are asking for fair market access in India and a more level playing field that is critical to spur growth and innovation.
If interested, there are several relatively easy reform measures that India could take quickly to show its commitment to the U.S. commercial partnership and its interest in working with our businesses. It could lower tariffs on information technology products that were just raised in this year’s budget or eliminate World Trade Organization (WTO)–contrary localization requirements affecting solar energy, medical equipment and beyond. It could encourage the siting of clinical trials in India through effective reform of its laws and regulations. It could expand its Copyright Act to combat physical and online piracy and protect against the disclosure of trade secrets and confidential test data for pharmaceuticals and agrochemicals. And it could implement the WTO Trade Facilitation Agreement providing more regularity to ports of entry and highly opaque customs rules. Steps such as these demonstrate a new trajectory in a way that mere words and communiques will not.
If India is ready to address the issues holding back its own economy and fair market access to our manufacturers, content creators and innovators, then the United States and India have the chance to create a brand-new partnership that will grow both economies in the ambitious manner envisioned.
Dempsey is the National Association of Manufacturers’ vice president of international economic affairs. Kilbride is executive director of international intellectual property for the U.S. Chamber of Commerce’s Global Intellectual Property Center (GIPC). The NAM and GIPC serve as co-chairs of the Alliance for Fair Trade with India.