In a development that could have serious repercussions for Indian exports to the U.S., four influential U.S. senators have asked the U.S. International Trade Commission (ITC) to investigate India’s 'unfair practices' in trade and foreign direct investment in agriculture, manufacturing and service sectors that discriminate against U.S. exports and investment, and study their impact on the country’s businesses and jobs.
In joint letter to USITC chairman Irving A. Williamson on August 2, Senate Finance Committee chairman Max Baucus, Ranking Member Orrin Hatch, House Ways and Means Committee chairman Dave Camp and Ranking Member Sander Levin noted that U.S. exports to India were low, given the size of its market, and asked the ITC to detail the policies India had in place that restricted trade and violated intellectual property rights, as well as the effect they have on US exports, businesses and jobs.
'We are writing to request that the USITC conduct an investigation under Section 332(g) of the Tariff Act of 1930 regarding Indian industrial policies that discriminate against U.S. imports and investment for the sake of supporting Indian domestic industries and the effect that those barriers have on the U.S. economy and U.S. jobs. We request that the report should be submitted by November 30, 2014,' the letter states.
They pointed out that India though was an important strategic partner, U.S. exports of goods and services to India were low. In 2011, exports to India were just $22.3 billion. Significantly, the call for investigations against India comes on the heels of the recent trips by Finance Minister P. Chidambaram and Commerce and Industry Minister Anand Sharma to the U.S. to woo investors.
Noting that India had risen rapidly and lifted millions out of poverty in the wake of its significant market-opening reforms and its efforts to seek foreign investment in certain sectors of its economy over the past two decades, they maintained that India continued to put in place measures that appeared to contradict its stated domestic growth objectives.
'India has a complex, non-transparent tariff and fee system and a burdensome customs procedures, and it maintains significant tariff and non-tariff barriers for U.S. goods and service participation in sectors including retail and agriculture,' the letter states.
It goes on to add: '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. 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.'
In order to understand the effects of 'these existing and anticipated barriers to US exports and investment in India,' the senators requested the USITC to provide it with 'an overview of trends and policies in India affecting trade and FDI in its agriculture, manufacturing and service sectors' and asked that 'the overall business environment be investigated.'
'A description of restrictive trade and FDI policies currently maintained or recently adopted by India; the sectors of the U.S. economy most affected by these policies; and the general competitiveness of sectors in India’s economy that are subject to the identified restrictions,' the letter concludes.