Statement by Deputy Chief of Mission Christopher Wilson at the WTO Trade Policy Review of India
June 2, 2015
Thank you, Chair. A warm welcome to Secretary Kher, Ambassador Prasad, and the entire Indian delegation.
India is an increasingly important trading partner for the United States with two-way trade recently crossing the 100 billion dollar threshold and an important expansion of two-way investment. As President Obama highlighted during his visit to India in January, our bilateral relationship with India is a “defining partnership of the 21st century.” We see our economic relationship, including here at the WTO, as a priority in this partnership. As evidenced by the rapid expansion of India’s trade with the United States and many other WTO Members, India’s role as a leader within this institution is increasingly important, with ever increasing responsibility.
We have seen a positive recognition from the Indian government that it can do more to attract foreign investment, and we are encouraged by a number of reforms being pursued with respect to taxes, land acquisition, and labor. There are encouraging signs that positive trade-specific reforms may be contemplated, including the drafting of the National Intellectual Property Rights Policy and recent public statements by Prime Minister Modi calling for a stronger IPR regime.
We are also pleased that in March, the Indian Parliament passed a bill increasing the limit on foreign investment in the insurance sector. And in April, India published its new 5-year foreign trade policy, announcing new programs aimed specifically at implementing the WTO Trade Facilitation Agreement. In light of India’s very direct role in shaping the TFA, we look forward to hearing India’s plans to complete timely ratification of the TFA and also to submit its Category A notifications.
The United States invites India to consider how additional steps to open the country’s trading regime can help India harness the benefits of trade to drive up investment and create jobs. This would include significant, long-term reductions in agricultural tariffs, and removal of unjustifiable SPS and TBT impediments on agricultural imports, both of which can help address food price inflation; opening the retail sector and the e-commerce sector to increased foreign participation, which can contribute to improving supply chains and greatly reducing food wastage; and avoiding recourse to export restrictions, minimum export prices, and other measures that tend to exacerbate the problems associated with global supply.
Indeed, the critical role played by India’s ongoing economic reforms and market-opening measures in fostering inclusive growth, including in fields such as information and communications technology, is well documented. It is therefore disappointing to see recent actions taken by certain entities in the government that appear to chart a different course. For example, India has already adopted or is considering adopting policies that require private entities to source a significant amount of their purchases from manufacturers in India, as in the case of retail policies, or that require conformity assessment to take place only in India, as in the case of information and communications technology policies. India also maintains trade-distorting export incentives on manufactured goods in sectors where India is export competitive, like textiles and apparel. Maintaining these types of initiatives tends to evoke comparisons to trade-restrictive policies pursued in previous, poorly-performing periods of India’s economic development, a trajectory we believe India wants to move away from.
The agriculture sector in India remains closed to many foreign products. Where exceedingly high tariffs do not make importation prohibitive, they foster an unpredictable trading environment inasmuch as India can change the applied tariff rates at a moment’s notice. Furthermore, products often face obstacles in the form of SPS and TBT measures that appear to have no scientific or other justifiable basis under the WTO Agreements. India also provides a broad range of assistance to its agricultural sector, including credit subsidies, debt forgiveness, and subsidies for inputs. These subsidies lower the cost of production for India’s producers, and have the potential to distort the market. In addition, agricultural producers of 24 products benefit from the government program to purchase food products from farmers at minimum support prices. These policies distort domestic market prices and incentivize the over-production of rice and wheat. Given the increasing concerns with food price inflation, and the growing needs of India’s food processing industries, India’s agricultural trade policy continues to do a disservice to consumers and producers in India.
India’s economic growth continues to be led by its dynamic services sector. As one of the leading benefactors among WTO Members of access to services markets around the world, India is in a unique position to lead by example by adopting polices that create an open regime for services trade and investment. Yet, key sectors of India’s own services market continue to remain closed or subject to significant limitations on foreign participation. Such policies will do little to help the government’s efforts to respond to significantly declining FDI flows over the past year.
As India’s “Make in India” campaign makes clear, a strong and effective IPR regime is a critical component of attracting and retaining investment and achieving India’s ambitious economic goals. Businesses in virtually all Indian industries can realize benefits through receiving strong brand and product protection, including through trademarks, copyrights, patents, and trade secrets. India’s current IPR policies, administration, and enforcement, unfortunately, do not yet match this ambition. We welcome the development of a National IPR Policy, and have appreciated the opportunity that the drafters afforded to public comments. As the Indian Government reviews the recommendations of the IPR Think Tank, we recommend providing a new round of solicitation of public comments before the Policy is made final.
Finally, with regard to transparency, the United States commends recent steps taken by the Government of India towards improving the transparency and effective functioning of its policymaking institutions. Last year’s guidance from the Ministry of Law and Justice prescribing at least 30 days for public comment on new legislation is a step in the right direction, and we look forward to additional information on how this guidance is being implemented across Ministries. Despite improvements, the United States continues to be concerned about the lack of transparency in many aspects of India’s trade policy, including a disappointing performance in WTO notifications. This lack of transparency contributes to the difficulties of firms trying to invest in and trade with India, and is a key reason for India’s low ranking in the World Bank’s 2015 “Doing Business” report. Implementation of a uniform, all-of government approach to the development of regulations would help address these concerns.
The United States appreciates the opportunity to engage in this dialogue, thanks India for responding to our questions, and looks forward to further discussing India’s trade policy regime with the delegation from India. Thank you.