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U.S. Identifies Ag Tariffs, IPR and Transparency Among Trade Concerns with India

Tuesday, June 09, 2015
Sandler, Travis & Rosenberg Trade Report

At a recent World Trade Organization trade policy review of India, Christopher Wilson, deputy U.S. permanent representative to the WTO, invited New Delhi to consider how additional steps to open its trading regime could help the country “harness the benefits of trade to drive up investment and create jobs.” Wilson said these steps include significant, long-term reductions in agricultural tariffs, removing unjustifiable impediments to agricultural imports, opening the retail and e-commerce sectors to increased foreign participation, and avoiding recourse to export restrictions, minimum export prices and other measures that tend to exacerbate the problems associated with global supply.

Given the “critical role played by India’s ongoing economic reforms and market-opening measures in fostering inclusive growth,” Wilson said, it is “disappointing to see recent actions taken by certain entities in the government that appear to chart a different course.” For example, India has adopted or is considering adopting policies that require private entities to source a significant amount of their purchases from manufacturers in India, as in the case of retail policies, or that require conformity assessment to take place only in India, as in the case of information and communications technology policies. India also maintains trade-distorting export incentives on manufactured goods in sectors where it is export competitive, such as textiles and apparel. “Maintaining these types of initiatives tends to evoke comparisons to trade-restrictive policies pursued in previous, poorly-performing periods of India’s economic development,” Wilson warned, “a trajectory we believe India wants to move away from.”

Wilson highlighted policies that leave India’s agriculture sector closed to many foreign products. “Where exceedingly high tariffs do not make importation prohibitive,” he said, “they foster an unpredictable trading environment inasmuch as India can change the applied tariff rates at a moment’s notice.” Products also often face SPS and TBT measures “that appear to have no scientific or other justifiable basis under the WTO Agreements.” Another issue is the broad range of assistance India provides to its agricultural sector, including credit subsidies, debt forgiveness and subsidies for inputs, that lower the cost of production and have the potential to distort the market.

India’s services sector has been a major contributor to the country’s economic growth, Wilson noted, and access to foreign markets has been critical for the success of that sector. At the same time, key sectors of India’s own services market remain closed or subject to significant limitations on foreign participation. Such policies will do little, he said, to aid efforts to respond to a significant decline in foreign direct investment over the past year.

Wilson praised India for developing a national intellectual property rights policy and welcomed the opportunity for the public to comment on it. “A strong and effective IPR regime is a critical component of attracting and retaining investment and achieving India’s ambitious economic goals,” he said, but “India’s current IPR policies, administration and enforcement, unfortunately, do not yet match this ambition.” The new policy should aid in this process and the U.S. encouraged India to again seek public input before finalizing it.

Finally, Wilson mentioned U.S. concerns about “the lack of transparency in many aspects of India’s trade policy” and said the implementation of a uniform, all-of-government approach to developing regulations would help address these concerns. He called a 2014 guidance document prescribing at least 30 days for public comment on new legislation as “a step in the right direction.”

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