The collaboration between the United States and India lie at the heart of our strategic interests in Asia. India has the sixth largest economy in the world in nominal terms and nearly one-fifth of the global population, with a long tradition of entrepreneurialism and democratic governance. India is already an important market for US goods and services and has the potential to become a crucial link in the global manufacturing supply chain.
While the fundamentals of this relationship are strong, below are some priorities to strengthen this partnership further in the coming year.
Through these priorities we see tremendous opportunity to deepen the US-India relationship, to the mutual benefit of both countries.
India represents a commercial and strategic opportunity for the U.S. in the Indo-Pacific region especially as countries look to de-scale their reliance on China.
U.S.-India trade is significant but well below its potential. U.S.-India goods and services trade totaled $146.1 billion in 2019, with U.S. goods exports reaching $34.3 billion and U.S. services exports at $24.3 billion. India was the United States’ 12th largest goods export market in 2019.
While President Trump and Prime Minister Modi signalled an interest in strengthening trade ties, progress has been stymied by their inability to conclude a first-ever trade agreement. The U.S. and India have been unsuccessful in their efforts to reach a modest, but potentially unprecedented, trade deal since April 2018, when the United States launched an eligibility review of India’s compliance with the Generalized System of Preference market access criterion. Meanwhile, the U.S. imposed 232 steel and aluminium tariffs in 2018 and India retaliated in 2019. And in response to the Indian government’s decision to increase and broaden its Equalization Levy in February 2020, the U.S. included India on the list of countries targeted in its June 2020 section 301 investigation of digital services taxes that are viewed as discriminating against U.S. companies.
Even as these trade tensions escalated, the Trump administration showed no interest in reconvening the Trade Policy Forum (TPF), the mechanism for bilateral trade dialogue, absent conclusion of a market-opening agreement. Indeed, the last TPF meeting was held in October 2017, just before the initiation of the GSP review.
In the meantime, India has implemented increasingly protectionist policies, including on digital trade, regulatory barriers, and government procurement that support industrial policies designed to incentivize investment in domestic manufacturing. India has leveraged and is considering significant new barriers that would discriminate against imports in a push to secure more domestic investment, especially in manufacturing. Trade remedy cases, mandatory standards, discriminatory regulatory treatments are all emerging areas that could further destabilize growth in US-India trade.
The following are recommendations that could be deployed in the first year of a Biden Administration to advance shared interests, particularly on COVID-19 recovery efforts, and to address growing anxiety over China’s behavior in the region.
Hold a TPF meeting
A TPF meeting early in the new Administration would underscore the importance of the relationship. Use the meeting to establish a work plan on priority issues, including:
Intellectual Property Rights
Innovation and commercialisation are economic drivers of the economy. The US and India partnership is the most important geopolitical and commercial partnership that India has with any country. Enhanced engagement on Intellectual Property Rights (IPR) in order to reaffirm both US and India’s commitment to continue making concrete progress on IPR concerns with sustained dialogues on Copyrights, Patents, Trade Secrets, Traditional knowledge and the Traditional Knowledge Digital Library (TKDL). We believe that with the United States Patents and Trademarks Office (USPTO) and the Department for Promotion of Industry and Internal Trade (DPIIT) recently signing a Memorandum of Understanding to cooperate on intellectual property examination and protection and to strengthen the IP systems in both countries will further culminate into the realisation of a robust IP landscape.
In addition to IPR being a subject under the Trade Policy Forum, both countries could commit to a bilateral IP dialogue in order to signify the importance of innovation and creativity. A larger emphasis on a partnership such as this will ensure robust and balanced IPR protection in fostering creativity, promoting innovation whilst taking into account the interests of all stakeholders including the public.
Two key trends have continued to define US-India defense relations for the past 15 years: increasing strategic alignment, especially with regard to China and defending a free and open Indo Pacific; and steadily increased defense cooperation, to include defense trade, military exercises and technology partnerships.
The dramatic escalation of tensions between India and China in 2020 creates an unprecedented moment of convergence in the first area. The signing of the Major Defense Partnership framework at the end of the Obama Administration and conclusion of four long- pending defense agreements on logistics, communications, industrial security and geospatial intelligence under the outgoing Trump administration set the stage for more ambitious cooperation.
The major challenges are budget constraints in the wake of COVID; differences in US and Indian approaches to the region, especially to Afghanistan and Pakistan; and how the new U.S. administration manages concerns about India’s human rights record. Some top priorities for the Biden administration in its strategic alignment with India will include:
In 2021, the economic and financial ties between the United States and India will lie at the heart of our strategic interests in Asia. India has the sixth largest economy in the world in nominal terms and nearly one-fifth of the global population, is already an important market for US goods and services, and has the potential to become a crucial link in the global manufacturing supply chain. To make the most of this strategic relationship, the incoming Biden administration will need to focus on three main priorities in the coming year.
The US-India healthcare partnership is based on the compelling need for improved healthcare, greater access, affordability and early availability of advancements in modern diagnostics, medicines and treatments for both the populations. While India supplies over 40% of the US generic demand and, in doing so, reduces the healthcare costs of the country, US has helped India with access to the latest advancements in medical technologies, devices, new innovative medicines and access to cutting edge medical science to serve unmet healthcare needs of its population. In future this partnership will be critical for robust public health ecosystem and below are three critical areas suggested for new US administration to engage with India on priority.
The United States and India need to explore healthcare partnership models for robust disease surveillance & data sharing, focus on investments in healthcare research to prepare and fight against new pathogens, assured supplies at the time of global crisis, and development of new hubs of pharmaceutical manufacturing.
US-India agriculture cooperation increasingly important role in the relationship but flashpoints remain with regard to market access for US agriculture products entering India. The U.S.-India Trade Deal remains deferred until the two sides agree on the tariff & non-tariff barriers imposed on agriculture products by both governments. With the incoming Biden-Harris Administration, it remains imperative to ensure that the dialogue on trade continues and it also provides an opportunity to engage on some new of the initiatives including:
U.S- India Agri Supply Chain Initiative: With the passage of the three farm laws namely, The Farmers Produce Trade and Commerce (Promotion and Facilitation) Act, 2020; The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Act, 2020; and The Essential Commodities (Amendment) Act, 2020, there is an opportunity for capacity building and knowledge sharing between US & India as the farmers get the opportunity to work directly with the private sector. Though the ongoing farmers’ protest creates a wait and watch situation for the private sector, we remain hopeful that once resolved, it also provides a huge opportunity for introduction of newer technologies in the agriculture supply chain in India.
Industry is encouraged by President-elect Biden’s pledge to reverse the Trump Administration’s stance on a wide array of immigration policy, including the temporary ban on the entry of green card applicants as well as nonimmigrants seeking entry in the H-1B, L-1, J-1, and H-2B visa categories. In addition, the Trump Administration’s prevailing wage rule from DOL and its H-1B wage prioritization rule from DHS were both issued as midnight rules in the final two weeks of the Trump presidency.
The rules seek to favor those in the highest wage levels despite the fact that many recent graduates work in fields—such as science and medicine—that are essential to America’s economic recovery and its battle against COVID-19. For example, a hair stylist or hotel manager in wage level 4 making $75,000 in a rural area would be considered whereas a vaccine researcher, doctor or software architect making $150,000 or more but at a lower wage level would not be considered. Using wage as the sole proxy could prevent these essential workers from entering the country. Both rules should be immediately frozen and ultimately undone through the appropriate regulatory process. In addition, the Biden Administration should drop any defense of Trump’s restrictions in court and move to review and rescind the restrictive policies on high-skill immigration and PERM that Trump put in place at USCIS, DOS Consular Affairs, and DOL ETA through policy memorandums.