The U.S. will consider a “301 investigation”, a probe employed as a precursor to tariffs and other trade measures against a country, against India if the trade issues between the two countries are not resolved quickly, Deputy U.S. Trade Representative (USTR) Jeffrey Gerrish said on Thursday.
Mr. Gerrish also said India finalising data localisation policies could be deal-breaker across the board between the two countries.
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His comments were made at a U.S.-India Strategic Partnership Forum (USISPF) event in Washington during a discussion with Susan Esserman, a former Deputy USTR in the Clinton Administration.
“We believe that we should utilise the full range of trade rules, including Section 301, where warranted. And we’re certainly looking at these policies and practices that India has engaged in light of that. We are doing it in a very deliberate, thoughtful way and trying to determine what the best approach is here,” Mr Gerrish said. “And we’ll see where that goes. At this point, we’re clearly in the very early stages of our engagement with the new Indian government and we want to see, of course, what the willingness is to address the trade issues that we have.”
Mr. Gerrish declined to give a timeline for these actions but said issues would need to be resolved quickly.
However, Mr. Gerrish added that if the market access issues related to GSP (Generalized System of Preferences) were resolved quickly, it would be a confidence building step and would help the process.
Section 301 of the U.S. Trade Act (1974) was also to authorise a 2017 probe that resulted in tariffs on Chinese exports to the U.S. from July 2018. Earlier this week, the USTR announced a 301 probe against France on a digital services tax.
“We certainly recognise the pivotal role that India plays as a vibrant democracy in the region to a free and open Indo-Pacific region and the important strategic relationship that our two countries have and in everything we do, we approach it with that in mind,” Mr. Gerrish said.
Mr. Gerrish, a former lawyer and Trump appointee to the U.S.’s trade office, was confirmed by the Senate in March 2018.
He said the two countries needed to move beyond the GSP review and take a more “comprehensive approach” to the issues between them. The US, in June, cancelled India’s benefits under the Generalized System of Preferences (GSP) programme for market access reasons.
“But it goes well beyond that [GSP] and we have a number of other market access issues relating to agricultural and non-agricultural products, but also other critical issues and areas involving digital trade, services and intellectual property protection enforcement,” Mr. Gerrish said.
A 301 probe, if launched, would be comprehensive.
“Just on the IPR issue, this is something that India has been on our Priority Watch List that we issued as part of our Special 301 Process since 1989,” Mr. Gerrish said.
A Special 301 Report is prepared annually by the USTR and is different from a 301 investigation.
Mr. Gerrish said his trade colleagues were in New Delhi not to negotiate but to ascertain whether the new government had the “willingness and wherewithal” to address and resolve the trade issues between the two countries, adding the U.S. has had “good interactions so far” with Commerce Minister Piyush Goyal.
A USTR delegation has been in New Delhi this week for talks, including with Commerce and Industry Minister Piyush Goyal.
The issues, however, are not long-standing ones, Mr. Gerrish said, but included recent developments such as with regard to digital trade.
“We’ve even had some... unfortunately... some additional troubling issues that have developed in the last year, particularly in the digital trade area,” Mr Gerrish said, adding India had taken a number of “troubling actions” in the data localisation arena. Mr. Gerrish cited the RBI electronic payments regulation, the draft e-commerce policy released earlier this year and the draft data privacy as examples of these actions.
The RBI had, in 2018, said payment system operators operating in India would need to store payment systems data within the country.
In the context of data localisation, Mr. Gerrish welcomed the fact that the Indian government had indicated that it would be consulting stakeholders on policies they are considering but indicated that data localisation policies, if finalised, would be deal breaker for U.S.-India trade.
“It would be a really problematic step if those [data localisation policies] were to be put in place and could really, I think, hurt the new engagement that we have and potentially halt that altogether across the board on the trade issues.”