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Business Group Complaint Could Presage WTO Cases Against India

Friday, June 07, 2013
Sandler, Travis & Rosenberg Trade Report

More than a dozen associations representing a wide range of small, medium and large U.S. companies sent a letter to President Obama June 6 complaining of a “persistent pattern of discrimination” by courts and policymakers in India that is “designed to benefit India’s business community at the expense of American jobs.” The letter called on the White House to address this problem by immediately initiating bilateral engagement at the highest levels and coordinating with the European Union and other like-minded economies. “If this engagement is not fruitful,” the associations concluded, the U.S. should “respond purposefully, using all available trade tools and diplomatic engagement.” Though not mentioned explicitly, this could include dispute settlement cases filed at the World Trade Organization.

The letter details several concerns. For example, the government of India “recently demanded that as much as 100 percent of its market for certain information technology and clean energy equipment must be satisfied by firms based domestically.” In addition, administrative and court rulings have “repeatedly ignored internationally recognized rights – imposing arbitrary marketing restrictions on medical devices and denying, breaking, or revoking patents for nearly a dozen lifesaving medications.” These actions are “unacceptable for a responsible middle-income country and rising global power” and “counterproductive to India’s stated goals to attract capital and to develop its own innovative economy.” Moreover, these and other actions “constitute a disturbing trend that may continue and even expand to other products, sectors, and countries.”

India has been the subject of an increasing number of trade-related complaints from the U.S. in recent months. In April, the Office of the U.S. Trade Representative’s annual report on foreign trade barriers included 12 pages of barriers to U.S. exports to India, including a complex and opaque system of customs tariffs and fees, customs valuation methodologies that do not reflect actual transaction values, inconsistent government procurement practices and export subsidies. In addition, concerns about weak protection and enforcement of intellectual property rights have resulted in USTR retaining India on the Priority Watch List in this year’s Special 301 report and an information technology group calling for the suspension of India’s eligibility for benefits under the Generalized System of Preferences, of which it was the top beneficiary in 2012.

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