India-US agree to focus resilient trade, resolving WTO

India and US agree to focus on resilient trade, resolving WTO disputes bilaterally

Minister Piyush Goyal and USTR Amb Katherine Tai

At the 13th Trade Policy Forum (TPF) ministerial talks held in Washington DC, Union ministerPiyush Goyal and US trade representative Katherine Tai hailed the fact that bilateral trade in goods and services had reached $160 billion in 2021, but also recognised that the full potential of the trade relationship remained “unfulfilled”.

Washington: Committing themselves to expanding their already growing trade relationship, India and the United States (US) have decided to build on the environment of trust to create resilient supply chains, resolve their existing trade disputes at World Trade Organisation (WTO) through bilateral mechanisms, work on expanding market access for each other’s products, and intensify their engagement through meetings of specific trade-related working groups on a quarterly basis.

At the 13th Trade Policy Forum (TPF) ministerial talks held in Washington DC on Wednesday, union minister for commerce and industry Piyush Goyal and US Trade Representative Katherine Tai hailed the fact that bilateral trade in goods and services had reached $160 billion in 2021, but also recognised that the full potential of the trade relationship remained “unfulfilled”, according to a joint statement released at the end of the talks.

Goyal told reporters that the TPF, since its relaunch in November 2021, had evolved into a “robust and outcome-oriented discussion” and was helping create a “smoother, more friendly and trusted environment for businesses to expand their trade and investment between the two countries”.

“The TPF is truly one platform where we have free and frank discussions, some which are predefined and some which emerge from the discussions.” These include issues of mutual interest as well as issues on which there are concerns on either side, the minister said.

US welcomes draft data law

Goyal said that the US has welcomed, prime facie, India’s draft Digital Personal Data Protection Bill that was released for public consultations at the end of November and appreciated American suggestions in the regard.

Both the US administration and tech industry had been concerned about India’s data localisation requirements, but the new proposed legislation states, “The Central Government may, after an assessment of such factors as it may consider necessary, notify such countries or territories outside India to which a Data Fiduciary may transfer personal data, in accordance with such terms and conditions as may be specified.” This is seen as opening the doors for cross-border data flows to trusted partners and geographies, of which the US is viewed as a key candidate.

Goyal said, “I must place on record our deep appreciation for the many guidance notes or suggestions we have received from the US from time to time on our digital laws and data protection and privacy laws so that we can align them with the needs of the world and help Indian businesses with their outreach with digital technologies.”

Pointing out that India is one of the largest suppliers on the information technology services side to the US, and that there is a “shared interest on both sides” to have a greater flow of data, Goyal said, “The new law placed for public consultations by ministry of electronics and information technology (Meity) was very very much appreciated by the US side and they do see that our effort to align the needs of industry, while maintaining the highest standards of data protection and privacy, has been brought out beautifully in the new law. The US side has expressed their prima facie satisfaction with the new law and will continue to engage with Meity.”

The joint statement said that both sides affirmed the importance of a conducive ecosystem for digital trade and agreed to enhance their engagement on the issue. In addition, the statement said that Goyal highlighted India’s interest in the potential of digital health, “particularly telemedicine services as an element of continuity of care during health emergencies.”

Trade convergences and divergences

Building on the achievements of the 2021 TPF, which enabled pork exports from US and mango exports from India among other steps, Wednesday’s talks opened up the prospect of the export of wild caught shrimps from India to the US.

The joint statement said that both sides had welcomed the finalisation of the turtle excluder device (TED) design, whose trials will help minimise the impact of fishing on sea-turtle populations. Goyal explained that wild caught shrimp exports had been banned by the US because of the concerns of the impact on turtles. “We hope that these trials in India will complete in the coming few months so that wild caught shrimps can be exported to the US. It was a product of good acceptance in the US market, good taste and has good potential for trade between the two countries.”

India and the US have also agreed to create a new working group on resilient trade.

The group, according to the joint statement, will focus on trade facilitation “which is particularly relevant to the construction of durable and resilient supply chains”; sustainable and inclusive growth “including cooperative engagement to promote labour rights and workforce development”; expanding dialogue on “good regulatory practices”; and the role of trade in contributing to environmental protection, including issues related to “mobilisation of sustainable finance and scaling up of clean technologies”, circular economy, and sustainable lifestyle choices.

India also highlighted, according to the joint statement, its interest in restoration of its beneficiary status under the US Generalized System of Preferences (GSP), which was revoked by the Donald Trump administration. But Goyal said that while he had placed the demand on record, it was not an issue that ranked high up on Indian priorities.

“I have not heard any significant clamour from Indian industry to focus our energies on the GSP issue. I have raised it. It is an issue that the Congress will have to take a call on. But it is not an issue that is high on our priority list or something on which we spend a lot of time. It was discussed, but more in passing. I can assure you that trade continues to expand very rapidly and I don’t think GSP withdrawal has been to the detriment of our growing trade ties.”

The two sides also discussed the contentious issue of intellectual property (IP), with the US, according to the joint statement, welcoming India’s ongoing domestic consultations regarding the “administration of its IP regime, including on the treatment of business confidential information related to working of patents, procedures for patent application oppositions, and streamlining of trademark infringement investigations”.

The two ministers also acknowledged that there remained work to be done to finalise access for certain agricultural products of interest to both sides and expressed their intent to increase dialogue on food and agricultural trade issues in 2023.

Among other issues, the ministers spoke about India’s draft Drugs, Medical Devices and Cosmetics Act; the streamlining of regulations under the Mandatory Testing and Certification of Telecommunication Equipment and Compulsory Registration Order; enhancing trade in professional services between the two countries; and cooperation in the fin tech sector.

Mobility and totalisation pact

The minister said that India found resonance vis a vis its request that business visa processing times need to be expedited so that trade, investment and business doesn’t suffer.

“India has made the request to the US that it may speed up issuance of regular business visas where people come for short trips. We are delighted that the movement of professional and skilled workers, students, investors, business travellers are expanding between the two countries. We are grateful that the US was able to process student visas on an expedited visas so that our students were able to come in the post-Covid context in the fall of 2022.”

On the long-pending issue of the totalisation pact — which deals with the issue of social security deposits of Indian professionals during their residency in the US and is a key Indian concern — the joint statement said that the ministers had acknowledged recent discussions on the issue, and “upon the receipt of additional information” from India, encouraged further engagement to arrive at an early outcome.

Industry responses

Commenting on the TPF, Mukesh Aghi, president and chief executive officer of the US India Strategic Partnership Forum, said that trade was a core pillar of the India-US strategic partnership – and since TPF’s relaunch, both sides had come together to resolve outstanding issues, find new areas of cooperation, and explore new areas of mutual interest.

“Despite the pandemic, the trade relationship is growing leaps and bounds. Numbers show that the US has overtaken China to be India’s largest trading partner,” Aghi said, adding that the creation of the working group on resilient trade was a milestone.

Ambassador (retired) Atul Keshap, the president of the US-India Business Council, said that the forum was an important step in sustaining the effort to strengthen bilateral commercial ties. “We are especially encouraged by both sides’ expressed intent to reconvene the TPF on a quarterly basis and the statement’s clear recognition that the potential of the bilateral relationship remains unfulfilled.” Keshap said that the creation of the working group on resilient trade reflected the urgent demand for a “high-standard, high-trust, and highly dependable trading ecosystem from industry and civil society”.

Experts offered a mixed assessment of the talks and Goyal’s visit. Richard M Rossow, the Wadhwani Chair in US India Policy Studies at The Center for Strategic and International Studies in Washington DC and an authority on the bilateral economic relationship, said that the minister’s visit was probably more notable for its engagements with business leaders than the formal talks with his counterpart. “As companies further look to diversify regional manufacturing out of China, India is under consideration—and Minister Goyal is a very good spokesperson and shepherd.”

Rossow said that the TPF itself lacked quantifiable outcomes that will alter trade. “But such summits can accelerate action behind the scenes. And some of the points outlined in the Joint Statement like the possible resumption of GSP and continuing talks over a Social Security totalisation agreement will have a stimulative effect on commercial ties if they are ultimately concluded.”

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