Visiting U.S. Trade Representative Michael Froman said here on Monday that despite positive developments such as the easing of the foreign direct investment cap in the Defence sector, the U.S. remained “cautiously optimistic” about relations with India as the Modi government had raised tariffs.
Mr. Froman said the “so-called Peace Clause,” proposed in the recently concluded Indo-U.S. World Trade Organisation (WTO) agreement, would depend on whether India’s foodgrain buffer programme met the conditions set in Bali.
The WTO’s Bali package included onerous conditions on making public details of food security programmes, which India has so far not complied with.
“We have already seen some positive signs: projects approved, foreign equity caps in key sectors such as defence and railways lifted. But we have also seen certain tariffs increased, and there is a long way to go on reform. So we are optimistic, but we are cautiously optimistic,” Mr. Froman said. He was addressing businessmen at a Federation of India Chamber of Commerce and Industry event.
On the WTO agreement, Mr. Froman said: “As part of the deal to allow the Trade Facilitation Agreement to be fully implemented, we agreed to intensify efforts to find a permanent solution to the food stockpiling issue and eliminate any ambiguity in the Bali package about the availability of the ‘so-called Peace Clause’ in the meantime, provided that food stockpiling programmes meet the conditions set in Bali.”
The breakthrough at the WTO, said Mr. Froman, would not have been possible without the personal engagement of President Barack Obama and Prime Minister Narendra Modi.
He said the two leaders gave the partnership a mantra: “Chalein Saath Saath: Forward Together We Go.”
Indo-U.S. Trade Policy Forum revived
Mr. Froman will meet Commerce and Industry Minister Nirmala Sitharaman on Tuesday for the first Trade Policy Forum between the two countries in more than four years.
“So it’s another historic moment in what has been an important year for relations between the United States and India,” Mr. Froman said.
Having heard Prime Minister Modi speak eloquently of his “Make in India,” “Digital India,” and “Smart Cities” initiatives, increasing investment in India will be critical as well, Mr. Froman said. “Rigid local content requirements are likely to spawn less competitive industries, increase costs to producers and consumers and lower India’s economic welfare.”
Mr. Froman said enforcing a world-class intellectual property rights regime is in India’s interests. He said dealing directly with piracy, counterfeiting and compulsory licensing will be critical if India is to play a leadership role in the knowledge economy and becoming “Digital India.”
“We have great interest in the ongoing review of India’s Intellectual Property Rights Policy,” said the U.S.T.R.
“Ultimately, the most important factor determining the future evolution of our bilateral economic relationship is the quality of the business environment based on transparency, consistency, predictability,” said Mr. Froman.
