Determining Success or Failure of the United States-India Trade Policy Forum
The United States will host the next Trade Policy Forum (TPF) in Washington, DC, on October 29. This meeting comes after the successful inaugural meeting of the Strategic and Commercial Dialogue held just a few weeks ago. Although the bilateral relationship seems to be improving, trade and investment issues always are a challenge for any dialogue between the United States and India.
Policymakers in the United States want to see trade and investment challenges meaningfully addressed by the government of India, which means lowering extremely high tariffs on goods where the U.S. exports could be very competitive in India and making foreign direct investment in the country easier, more transparent and protected from interference by the central or state government.
For India, the issues that fall under the umbrella of trade and investment are much broader than those included by the United States. India already signaled that it will raise the issue of totalization – a social security agreement whereby temporary workers would be exempt from paying into the U.S. social security system, saving Indian companies a significant amount of money. In addition, India will raise the issue of visas for non-immigrant workers; India claims that the United States rejects a significant amount of its applicants for these visas causing its workers and companies to have less access to the U.S. market. India views this as a trade barrier and not an immigration issue.
There are also a number of difficult trade issues that seem to have a permanent place on the discussion agenda, including intellectual property protection, agricultural market access, subsidies, sanitary and phytosanitary concerns and investment concerns.
Will the TPF continue to be a talk shop where issues are raised, discussed and shelved for discussion next year or will it become a forum where trade and investment issues can be addressed and concerns resolved in a mutually acceptable manner? This is the question for this week’s meeting. Over the last few years a meeting would be called successful if both sides simply showed up to the meeting at the agreed place and time, discussed the agenda and closed by agreeing to disagree. Now there is significantly more pressure on both governments to actually make progress and find ways to work together. The newly constructed US-India CEO Forum met on the margins of the Strategic and Commercial Dialogue last month and agreed to pursue collaborative activities in a number of areas to boost cooperation among private sector actors. Building upon this success, there is pressure on the U.S. and India to find similar areas of collaboration and cooperation by facilitating exchanges of best practices, regulatory issues and identifying and removing barriers to trade and investment.
It is clear that President Obama and Prime Minister Modi want to find ways for the two governments to work more closely together and make progress on economic issues, but when it comes to sensitive issues the spirit of collaboration can be overcome by political realities.
The outcomes of this TPF meeting are important and will provide important insight into the strength of the relationship and if the political commitment to improving the trade and investment relationship is such that difficult issues will be addressed by both sides. Will India commit to a pathway to lower its high tariffs on agricultural goods and improve its protection of intellectual property? For the United States it will be important to see if there is a commitment to discuss totalization in a more structured and ongoing basis. Will the U.S. agree to discussions on visa issues in a trade and investment policy dialogue? There will be clues to the relative success of the TPF – any agreement to pursue ongoing discussions of difficult issues will be a success. This includes discussions related to tariffs, investment regimes, intellectual property, totalization and visas. Even if the agreement is to substantially pursue discussions on a subset of these issues that would be an indication of at least limited success.