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Trade Barriers, Business Environment Among Topics at U.S.-India Dialogue

Friday, September 25, 2015
Sandler, Travis & Rosenberg Trade Report

Trade Barriers, Business Environment Among Topics at U.S.-India Dialogue

At the first U.S.-India Strategic and Commercial Dialogue held Sept. 22 in Washington, D.C., the two sides announced plans to cooperate in a number of ways toward their goal of increasing bilateral trade five-fold. Talks reportedly made “enormous progress” on priorities such as improving the ease of doing business in India, infrastructure development, standards and global supply chains. At the same time, there was little to no movement on some of the more problematic issues, including a bilateral investment treaty and intellectual property rights.

Talks on a BIT have stalled as the two sides re-evaluated the models they use as a foundation for such agreements, and the U.S. deemed insufficient a preliminary revision released by India this past spring. Indian officials said they are still working to finalize their model BIT and that they will pursue other efforts with the U.S. in the meantime.

The two sides also made no mention of IPR following the meeting. House and Senate trade committee leaders had expressed hope prior to the S&CD that it would lead India to take steps to address concerns about its “inadequate system for the protection and enforcement of copyrights” and “insufficient respect for and enforcement of patents, most notably relating to pharmaceuticals.”

Business Environment. A joint work stream on the ease of doing business was launched with an initial focus on a commercial law initiative to exchange best practices on matters like contract enforcement, insolvency and bankruptcy law, and cross-border trade, including non-tariff

barriers. Quarterly discussions on these and other related issues are planned.

Indian Prime Minister Narendra Modi has set a goal of moving India into the top 50 of the World Bank’s “Ease of Doing Business” rankings, from 142nd currently. U.S. Commerce Secretary Penny Pritzker said that improving contract enforcement and modernizing bankruptcy practices are central elements to achieving that goal.

Trade Barriers. The two sides committed to exchanges between certain regulators with a view to minimizing regulatory barriers to bilateral trade.

Prior to the S&CD, congressional trade leaders highlighted as a primary concern “non-transparent, and often discriminatory, regulatory and licensing procedures and practices,” including “a variety of forced localization measures covering products ranging from solar to information technology.”

The Alliance for Fair Trade with India added that “India’s ‘innovation mercantilist’ policies and regulations promote Indian industry at the expense of American companies and workers, especially in high paying and globally competitive sectors like information technology, renewable energy, medical equipment, pharmaceuticals, biologics, and entertainment.” This group also urged India to eliminate requirements for private entities to use made-in-India products, modify in-country security testing of telecommunications equipment, eliminate a 10 percent tariff increase on certain telecom equipment covered by the Information Technology Agreement, and lower tariffs currently above 100 percent on automobiles, textiles, distilled spirits and other products.

Textiles. The two sides will facilitate exchanges on technical textiles between centers of excellence in India and U.S. universities and will encourage industry to participate in trade exhibitions focused on technical textiles in their respective countries. Collaboration on standards in this area will be considered, and concerns regarding barriers to technical textile exports will be discussed.

Standards. In consultation with industry in both countries, discussions on standards will focus on identifying priority sectors where cooperation could lead to positive outcomes for bilateral trade. A private sector-led collaboration between the Confederation of Indian Industry and the American National Standards Institute will maintain and update a portal containing standards information for the use of industry, including small and medium-sized enterprises. To support the removal of barriers that impact the global supply chain, the two countries will exchange best practices for the operation of national enquiry points under the World Trade Organization Agreement on Technical Barriers to Trade and will explore opportunities for more cooperation on reference standards between India’s National Physical Laboratories and the National Institute of Standards and Technology.

Investment Promotion. The U.S. Department of Commerce’s SelectUSA initiative and the Silicon Valley chapter of The Indus Entrepreneurs signed a memorandum of intent to work together to provide Indian entrepreneurs the data and assistance they need to facilitate their expansion into the U.S. SelectUSA will lead the first-ever “India Road Show” to New Delhi, Mumbai, Chennai and Kolkata in October to offer U.S. state, local and regional economic development organizations the opportunity to directly market their locations to potential investors throughout India.

Infrastructure. Progress in infrastructure collaboration will be accelerated, including a smart cities infrastructure development trade mission to India in February 2016 and a smart cities reverse trade mission to the U.S. that will be coordinated by the U.S. Trade and Development Agency.

Defense Trade. Building on the conclusion of their 10-year Defense Framework Agreement, both sides expressed satisfaction with progress on defense technology and trade initiative pathfinder projects and the growing cooperation between U.S. and Indian defense industries through the “Make in India” initiative. The Indian defense minister is expected to soon visit the U.S. to deepen discussions on military exercises, defense trade and technology, and areas of cooperation.

Satellites. The U.S.-India Technology Safeguards Agreement was renewed to facilitate the launch of U.S. satellite components on Indian space launch vehicles.

Wildlife Trafficking. A memorandum of understanding was finalized to enhance cooperation on conservation and combat wildlife trafficking.

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