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Trade Issues Highlighted for U.S.-India Meeting

Tuesday, June 27, 2017
Sandler, Travis & Rosenberg Trade Report

Ahead of a meeting between President Trump and Indian Prime Minister Narendra Modi this week, lawmakers and industry interests called for Trump to press Modi to take concrete action on a number of trade issues.

In a June 23 letter the leaders of the Senate Finance and House Ways and Means committees urged Trump to “prioritize the elimination of Indian trade and investment barriers that significantly harm American businesses and workers.” These barriers include high tariffs (a 48.5 percent simple average final bound tariff rate and a 13.4 percent simple average applied tariff rate) that, among other things, have led to the smuggling of some U.S. goods through third countries; weak standards and insufficient enforcement of patents, trademarks, and copyrights; and inconsistent and non-transparent licensing and regulatory practices, including unnecessarily slow and opaque approval processes for biotechnology products, sanitary and phytosanitary standards that appear to be non-science based, burdensome import and customs procedures, significant limitations on foreign participation in professional services, and restrictive foreign equity caps for financial, retail, and other major services sectors. India is also continuing to impose new barriers, the lawmakers said, including the expansion of its “non-transparent and arbitrary” system of medical product pricing and increasing barriers to digital trade such as data localization requirements, restrictive encryption standards, and burdens on Internet services.

Obtaining the removal of these barriers is key to increasing U.S. exports to India, the letter said, which account for less than two percent of U.S. exports globally. U.S.-India trade flows are at all-time highs, but the bilateral trade relationship “underperforms” due to “India’s persistent failure to enact market-based reforms and resolve significant and discriminatory impediments to trade and investment.” The letter cited a 2014 International Trade Commission report concluding that if India fully eliminated its tariff and investment restrictions and made its standards of IPR protection comparable to those of the U.S., exports from the U.S. to India would rise by two-thirds and U.S. investment in India would roughly double.

Separately, the National Association of Manufacturers has issued a “scorecard” evaluating India’s progress in improving the ease of doing business. NAM pointed out that India is moving forward in some areas, such as streamlining licensing and government approval processes, implementing “critical components” of its national IPR policy, implementing its commitments under the World Trade Organization Trade Facilitation Agreement, and allowing 100 percent foreign ownership across manufacturing industries. However, the scorecard was critical of India’s efforts to establish a mandatory 30-day notice and comment period for proposed rules, keep its commitments under the WTO Information Technology Agreement, fully eliminate forced localization rules, improve IPR protections, and eliminate unwarranted restrictions on cross-border data flows.

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