Lawmakers Target India's Trade Barriers

Congressional trade leaders called on the U.S. International Trade Commission (ITC) last week to investigate India for unfair and discriminatory trade policies.

In a letter to ITC Chairman Irving Williamson, Senators Max Baucus (D-MT) and Orrin Hatch (R-UT) and Representatives Dave Camp (R-MI) and Sander Levin (D-MI) requested a full report on Indian industrial policies that discriminate against U.S. investment in the interest of supporting domestic Indian companies, as well as on the effects these potential barriers have on the U.S. economy and employment market.

India, the world's second largest country by population, has been an important U.S. regional ally, but goods and services exports from the U.S. to the south Asian nation have remained disproportionately low. In 2011, U.S. goods exports to India topped out at $22.3 billion, and total exports, including services, only reached about $33 billion. For comparison's sake, total U.S. exports to South Korea in 2011, before the U.S.-South Korea Free Trade Agreement (FTA) had even taken effect, were nearly twice as high, at $60 billion, despite the fact that South Korea's population is less than 10% of India's.

Granted, India and South Korea are two very different countries, but officials in Washington still want to address than disparity, which they believe is caused in part by India's "complex, non-transparent tariff and fee system and byzantine and overburdensome customs procedures," among other policies.

"India maintains and continues to put in place measures that appear to contradict its stated domestic growth objectives," said the letter. "More recently, India has introduced new localization-forcing measures such as local content and technology transfer requirements in the green technology and information and communications technology sectors.  And India has not yet taken action to fully and effectively protect and enforce copyrights, including in the digital environment, and has applied its patent law in a discriminatory manner, particularly against innovative U.S. pharmaceutical companies, so as to advantage its domestic industries."

On broader terms, the Indian government has focused on developing and supporting Indian industries by forcing foreign firms to use local facilities and suppliers, and to transfer their intellectual property to Indian entities. The letter alleges that India is likely to adopt additional measures to these ends, and raises the issue of the example that India's setting as an influential regional economic powerhouse, and the ramifications that could have on U.S. exports to other countries down the road. "We are very concerned about the broader impact that India’s trade policy may be having on the global trading system, both in terms of the model it is setting for other countries and the drag it is exerting on multilateral trade negotiations," they added.

The ITC will have until late 2014 to cobble together the report using existing sources and a forthcoming survey of U.S. firms.

- Jacob Barron, CICP, NACM staff writer

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