Trade Policy Review Of India
U.S. Statement by Ambassador Dennis C. Shea
Geneva, January 6, 2021
As Delivered
Thank you, Chair. A warm welcome to Secretary Wadhawan, Ambassador Navnit, and the entire Indian delegation.
India is an increasingly important trading partner for the United States with two-way trade surpassing $146 billion in 2019. Even during the COVID-19 pandemic, which has severely impacted both of our countries, we have seen companies continue to announce significant bilateral FDI flows, which reflects the further strengthening of economic ties between our countries. We see our economic relationship, including here at the WTO, as a priority in our bilateral partnership. As evidenced by the rapid expansion of India’s trade with the United States and many other WTO Members, India’s importance and responsibility within this institution continues to increase.
While we are encouraged by the Indian government’s efforts to attract additional foreign investment and its pursuit of a number of economic reforms, it is disappointing to see recent actions taken by India that appear to chart a different course and actually restrict trade. For example, since India’s last TPR, India’s simple average MFN applied tariff rate has increased from 13.5 percent in 2015 to 17.6 percent in 2019, according to the WTO tariff profiles. This trend will not facilitate India’s further integration into global supply chains. The United States urges India to take additional steps to open the country’s trading regime to help India harness the benefits of trade to create jobs. This would include significant reductions in tariffs as well as the removal of unjustifiable SPS and TBT impediments on imports.
The agriculture sector in India remains particularly closed to many foreign products. High tariffs often make importation prohibitively costly, and products face obstacles in the form of SPS and TBT measures that appear to have no scientific or other justifiable basis under the WTO Agreement. India also provides a broad range of assistance to its agricultural sector. The government program to purchase food products from farmers at minimum support prices distorts domestic market prices and incentivizes the over-production of products such as rice and wheat. As a result, India’s agricultural trade policy continues to disserve consumers and producers in India.
We have also seen a recent increase in measures, both proposed and implemented, that could create technical barriers to trade in other sectors, including, for example, information and communication technology products, medical devices, and chemicals. India continues to expand the list of products required to undergo conformity assessment only in India. Such domestic testing requirements and mandatory quality control orders that are not in line with international standards continue to limit India’s ability to further integrate into global supply chains and attract investment.
India’s dynamic services sectors continue to drive economic growth, and India has benefited from access to WTO Members’ services markets around the world, However, in key services sectors, India prohibits or significantly limits foreign participation. Such policies will do little to help the Indian government’s efforts to win the competition for increasing FDI flows in Asia. Opening the retail, e-commerce, insurance, and other services sectors to increased foreign participation, including by allowing fully foreign-owned enterprises in these sectors, will not only help incentivize investment, but will also contribute to improving supply chains. The digital economy is also a powerful force for domestic and global economic growth, but India has implemented digital trade barriers that likely will undermine that growth. The United States encourages India to refrain from introducing barriers to digital trade, including restrictions on cross-border data flows.
As India’s “Make in India” campaign makes clear, a strong and effective IPR regime is a critical component of attracting investment and achieving India’s ambitious economic goals. While India’s enforcement of IP has gradually improved, it has been inconsistent, and India remains one of the world’s most challenging major economies with respect to protection and enforcement of IP. Indian industries could realize the benefits of receiving strong brand and product protection through trademarks, copyrights, patents, and trade secrets, but India’s current IPR policies do not yet facilitate this development.
Finally, with regard to transparency, the United States acknowledges steps the Government of India is taking to improve the transparency and effective functioning of its policymaking institutions. 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 and limited notice and comment procedures for domestic and foreign stakeholders. This lack of transparency results in policy uncertainty, which creates difficulties for firms trying to invest in and trade with India.
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 our friends from the Indian delegation over the next two days.
Thank you.