Source: World Trade Online
Senior administration officials have made clear that Indian Prime Minister Narendra Modi’s Sept. 29-30 trip to Washington is not expected to yield major outcomes on trade issues when they omitted them from the list of areas where they expect to announce commitments.
“I think what you will see is really a good, strong focus on defense and security issues, but also on clean energy and climate change,” one of the officials said in a Sept. 26 background call on Modi’s meetings with President Obama. “Probably the majority of deliverables that come out of the conversation should be within that spectrum.”
In addition, the official emphasized that this is the first time the two leaders will meet and that they will be “sharing their perspectives on a vision for the relationship and for the path forward.” He said that setting this vision would be “just as important, if not more important, than the list of deliverables.”
A second administration official on the call indicated that in the economic area, the two leaders would discuss how to break the deadlock on the stalled Trade Facilitation Agreement (TFA) in the World Trade Organization, as well as U.S. objections to Indian policies on intellectual property protections and “various constraints on investment.”
The leaders will talk about how the two countries can move forward toward implementation of the TFA, while addressing India’s longstanding concerns about food security, this official said.
At the end of July, India proposed delaying implementation of the TFA until a permanent solution was reached on how to deal with food stockholding programs that breach agricultural subsidies commitments in the WTO. India wants a permanent solution to exempt such programs — in which governments buy commodities from farmers at above-market prices to distribute to poor people — from counting towards WTO subsidy limits.
Rick Rossow, a senior fellow at the Center for Strategic and International Studies, in an interview with Inside U.S. Trade echoed the assessment of the visit provided by the administration officials. He argued that more substantive outcomes usually arise out of continued engagement through bilateral dialogues, and that therefore recommitting to existing dialogues and resuming the Trade Policy Forum (TPF) would be more significant than it might seem. The U.S. and India have not had a TPF meeting since 2010.
Rossow argued that more significant outcomes would likely come out of Modi’s meetings with various business groups and CEOs in New York this weekend, before he comes to Washington on Sept. 29. He noted that Modi liked to deal with businesses when he was head of the Indian state of Gujarat, and that he is known for his follow-through on commitments he made then.
Such an outcome would fall short of the demands made by the Alliance for Fair Trade with India (AFTI) in a Sept. 25 letter to Obama, which urges him to press Modi for “concrete action and real results” on removing trade barriers and thereby promoting economic growth in both countries.
The letter charges that India abrogated its commitments at the Bali Ministerial with its demands demands on TFA, thereby blocking its implementation. That is one of the “troubling policies” that the new Indian government has pursued, in addition to raising tariffs on telecommunications products and “imposed burdensome new testing requirements on information and communication technology products from the United States and other countries.”
The Modi government in its first budget, released in July, imposed tariffs of 10 percent on a range of telecommunications products, according to the Information Technology and Innovation Foundation.
AFTI in its Sept. 25 letter urged Obama to press Modi “for concrete action and real results that can drive economic growth in both our countries,”
“Since taking office, Prime Minister Modi has declared India ‘open for business’ and promised to incentivize investment and ‘give the world a favorable opportunity’ to trade with and produce in India. If these bold statements can be translated into concrete action, it will be to the benefit of both our countries,” the letter said.
Specifically, AFTI seeks reforms to policies instituted by the previous government such as increased tariffs; discriminatory local content requirements; “unworkable” domestic regulations at odds with international standards; denial and revocation of patents; the threat of compulsory licenses for patents; and failure to combat piracy of music, films, and software.
U.S. businesses have flagged two objections to India’s pharmaceutical patent policy. First, India’s ability to grant a compulsory license if a patentee does not “work” the product in India by either manufacturing there or by granting a license to another entity for manufacturing in India. Compulsory licenses break patent rights and allow generic production of a patented product, which India has only done once for a pharmaceutical patent.
Second, U.S. companies cite as a serious problem the fact that several patents have been revoked through litigation based on the fact that the patented product did not constitute a new invention, including a widely reported case in which the Indian Supreme Court invalidated a cancer drug produced by Novartis. These were invalidated under Section 3(d) of India’s Patents Act, which says that a new form or use of a drug is not an invention unless it enhances the efficacy of the substance.
But AFTI did note with optimism reports that the Indian government is planning to develop a comprehensive policy on intellectual property rights (IPR). “A policy that recognizes the United States and India have shared economic and cultural interests in promoting investment in original production, and that modifies guidelines that currently present a clear bias against the granting of biopharmaceutical patents would be a positive step toward eliminating some of the barriers to U.S. exports imposed by the previous government,” the letter says.
Rossow said the Indians have shown absolutely no appetite for changing the legislation surrounding their patent policy, but noted that they could eventually opt to make smaller changes to the patent process.
The AFTI letter apparently refers to Sept. 8 comments by Indian Commerce Minister Nirmala Sitharaman as reported in a Sept. 23 announcement by Indian civil society groups, which indicated that the new government would roll out a revised policy on IPR.
“This is the first time we are coming out with an IPR policy. We are very strong in IPR and we certainly want to protect our interest,” Sitharaman said, according to the civil society statement. “IPR policy issues have been hanging for quite a long time and the new policy will give direction in terms of protecting IPRs in India. With the U.S. we have (certain) issues. … Because India does not have any policy, developed nations are picking holes in India’s IPR laws.”
Indian civil society groups expressed alarm about Sitharaman’s statement, saying the IPR review “could become a hostage to the pressures of the U.S. government and companies.” They said that the existing Indian pharmaceutical policies to which U.S. companies object exist to protect the interests of Indian patients “as well as millions of people living in other developing countries.”