Remarks by United States Trade Representative Michael Froman to the U.S.-India Business Council
Remarks by United States Trade Representative Michael Froman to the U.S.-India Business Council
U.S. Chamber of Commerce
July 11, 2013
*As Prepared for Delivery*
“It is a privilege to be here with so many friends who share at least one thing in common: a devotion to the success of the U.S.-India economic relationship. I am especially honored to be here with Minister Chidambaram and Minister Sharma, and I would like to recognize someone who has been a dear friend and wise advisor, Montek Singh Ahluwalia.
“Over the past four-plus years, I’ve worked closely with my Indian counterparts bilaterally, in the G-20, the Major Economies Forum and the UNFCCC negotiations. We’ve worked on global economic issues, export control reforms, technology cooperation, climate change and energy security, but tonight, I’d like to focus on trade and investment.
“I am the last speaker in a very long program. So let me brief, and let me be frank.
“We meet at an important moment. A moment when Europe is experiencing high levels of unemployment and is struggling to return to a path of sustained growth. Emerging economies are slowing and there is a debate among economists about whether they will be able to return to and sustain the high levels of growth they experienced just a few years ago. And here in the United States, the economy is growing and we’re creating jobs, but there is a long way to go. In this context, doing everything we can to develop the full potential of the U.S.-India economic relationship becomes all the more important.
“When President Obama visited India in November 2010, he and Prime Minister Singh noted that the ‘strategic partnership’ of the United States and India is based on shared values and converging interests. We are all aware of the natural potential of our relationship. There is a Hindu proverb, however, that reminds us: ‘Greatness is not the fruit of birth, but of effort; it is not attained but by the greatest exertions.’ So in order to revive and realize that untapped potential, we must work hard – together.
“Experience has shown that the United States and India demonstrate the greatest progress when they are open to each other’s trade and investment, helping to drive economic growth and creating jobs in both countries.
“The United States has benefited from a steadily increasing flow of Indian goods and services to the United States – whether those are IT-enabled services that support our top companies, guar gum that is helping propel our shale gas revolution, or generic medicines that play a critical role in helping keep healthcare costs down.
“And U.S. goods and services are playing an important role in the Indian growth story. U.S. locomotives help power India’s railways. U.S. wind turbines help quench India’s growing thirst for energy. U.S. firms are contributing to the design and construction of India’s newest gleaming airports. U.S. medicines are given away to tens of thousands of underserved patients across India. U.S. companies help supply the technologies and seeds that have significantly increased yields and incomes for farmers in India. U.S. helicopters will help defend India’s security interests, and we will soon see real opportunities to move ahead in co-production and co-development. And the list goes on and on.
“The same is true on the investment front. U.S. investment in India topped $28 billion in 2012 and Indian investment in the U.S. has doubled in the last four years.
“The ministers here have been leading the charge on the investment side, taking decisive action to propose measures to streamline the investment regime and raise or eliminate caps on foreign direct investment in a number of sectors including telecommunications. We welcome these reforms, but we all know that they are necessary, but not sufficient, to pull in the investment that India needs to return to the path of robust growth.
“After all, in a highly competitive investment environment, investors look for a consistent commitment to, not sporadic outbursts of, reforms. Most importantly, they look for the enduring confidence that comes from long-term, sustained, high levels of growth.
“Let me stress that as a friend of India and one of the caretakers of our economic relationship, I am concerned about the investment and innovation environment in India – not just from the perspective of our bilateral relationship, but from the perspective of India’s own economic aspirations.
“The challenges we face are well known to all of you. Indeed, it is the business community, which has been such an important proponent of deepening U.S.-India ties, which has in recent months become increasingly vocal about certain policies. There has been great concern about localization measures that are meant to stimulate domestic manufacturing and achieve other important domestic policy objectives, including preferences for solar developers who use domestically manufactured solar equipment.
“Similarly, in the area of intellectual property rights, there has been substantial concern raised about recent actions to impose special rules for the patenting of medicines that otherwise meet the internationally accepted criteria.
“Now, let me be clear: there is nothing inappropriate about taking steps to create jobs, promote domestic manufacturing, mitigate threats to security, and support public health. The United States has the same interests and supports those objectives not only at home, but also in India, as evidenced by the range of our bilateral dialogues on information and communications technology, cyber-security, health, and other areas. But we hope to work with India to achieve these ends with policies that enable, rather than thwart, these vital objectives and that do so in a way that brings our economies closer together, rather than distorts trade and investment and discourages innovation.
“Both countries want a vibrant manufacturing sector and the good jobs that come with it. Rather than the import substitution policies that some have pursued in the past, building uncompetitive industries behind a wall of protectionism, India has the potential to be a key participant in globally competitive value chains. In this respect, I want to welcome the positive step the Indian Government took this week to ensure that the revised Preferential Market Access policy would not require private firms to purchase domestically manufactured goods.
“We look forward to working with India as it addresses its manufacturing challenges. I am pleased that across the U.S. Government, a number of agencies are partnering with India to create jobs and spur high levels of growth. Whether it is working with Treasury to deepen capital markets as part of the Economic and Financial Partnership; with the State Department to help develop community colleges in India as part of the Higher Education Dialogue; with the Department of Energy to spur innovation in the clean energy sector under PACE- D; or with USTR and other agencies in a dialogue to identify successful, market-friendly approaches to manufacturing, the United States is committed to working with India to advance its economic objectives.
“Likewise, we have a strong interest in working with India to meet its public health needs. We firmly believe that there are ways to aggressively pursue public health objectives, support innovation and promote India’s generics industry to save countless lives – all at the same time. An easy and quick step in this direction, which would have an immediate effect on access to medicines, would be to eliminate India’s tariffs and other internal charges on medicines, which in some instances run well over 20 percent.
“Whether in manufacturing, public health, security or a host of other areas, we remain eager to work with India to pursue approaches that advance not only our bilateral relationship but our respective domestic objectives as well.
“But beyond our bilateral relationship, as two great democracies and two of the largest economies in the world, we have an obligation to work together to promote progress at the multilateral level as well. As many of you know, the World Trade Organization (WTO) will be holding its next Ministerial meeting in Bali, Indonesia, in December. With the Doha Round of trade negotiations at an impasse, the world is looking to the WTO to act, to demonstrate that it can pursue fresh, credible approaches to trade liberalization.
“There is the potential to do something quite meaningful in Bali – to agree on a trade facilitation agreement that would significantly reduce costly frictions at the border that damage competitiveness, particularly for developing countries, but we have a lot of work to do. India has emphasized the importance it attaches to its food stockholding proposal. The United States has said plainly that food security in developing countries is indeed an important issue for the WTO to address. And no country has been more at the forefront of advancing food security than the United States, whether it was President Obama’s mobilization of more than $22 billion for food security at the L’Aquila summit in 2009 or the implementation of our Feed the Future program or the launch of the New Alliance on Food Security and Nutrition at the Camp David Summit last year. I’ve just returned from accompanying the President on his trip to Africa, and we are already seeing millions of smallholder farming families there benefit from these programs.
“So let me be clear: we share India’s concern about and commitment to food security. We recognize India’s need and right to feed its people. But just as in the case of manufacturing policies, we think there are more and less trade-distortive ways to achieve that objective. We are certainly willing to work with India to address its legitimate food security needs, but we underscore the importance of doing so in a way that minimizes the distortion of global trade. We look forward to working with India in a way that allows the broader WTO agenda to proceed as we examine the full range of trade-related issues affecting food security.
“It continues to be the hope of the United States that all WTO Members will make good-faith efforts to deliver that package of meaningful outcomes in Bali. If Bali succeeds in producing a package of outcomes, with a high-quality trade facilitation agreement at its core, the WTO will be seen not just as a dispute settlement organization, which is important in itself, but also as a forum for furthering multilateral trade liberalization. On the other hand, if Bali fails, it is hard to see how Doha succeeds. We’ll continue on with regional negotiations, such as TPP and T-TIP, and plurilateral negotiations, such as those toward a Trade in Services Agreement, but if we can’t complete trade facilitation, which benefits every country and is seen as relatively uncontroversial, it’s difficult to imagine tackling the most nettlesome issues of a full Doha agreement.
“I am excited to work with India on this and many other issues that will be key to building our ‘strategic partnership.’ In that regard, Minister Sharma and I met earlier today and agreed to direct our staffs to lay the foundation for a productive ministerial-level Trade Policy Forum that will make progress on key outstanding issues.
“Consistent with this renewed dialogue will be a much greater emphasis on engagement with the private sectors of both countries, including through a reinvigorated Private Sector Advisory Group (PSAG) and through engagement with groups like the USIBC and the U.S.-India CEO Forum.
“And even as we work with our partners in other negotiations, there is much we can do with India – as two great, democratic market economies – to strengthen the international trading system. For example, we have common interests in combating the growing piracy that threatens our creative industries. We have common interests in responding to unfair trade practices that create an unlevel playing field. And we have shared interests in ensuring that trade and investment play a critical role in the economic development of the poorest countries and contribute to the elimination of poverty. There is much we can do together, for the international community, based on a strong bilateral partnership.
“Let me conclude by thanking you again for the privilege of being able to speak with you this evening. We have come a long way in the last 25 years, and we should take note of the progress we’ve made, but there is much greater opportunity in this bilateral economic relationship and, therefore, much work to be done. I look forward to working with all of you to achieve that objective. Thank you.”