John Neuffer photo
Looking for Solutions to U.S.-India Trade Challenges

The trade relationship between the United States and India will be under a congressional microscope today, as a congressional subcommittee looks at opportunities for, as well as potential threats to a balanced, mutually beneficial trading system between the two countries. ITI’s Dean Garfield will testify at the hearing, and is expected to focus on the Government of India’s forced localization initiative policy known as the preferred market access (PMA) policy. In a nutshell, the PMA would require IT products to be produced and sold in India. After more than two decades of reforms that gradually opened India’s economy to greater competition, innovation and expansion, the PMA represents a significant step back to a more closed, limited economy.

Just yesterday, the Times of India reported that a piece of this proposal – to require telecommunications licensees in India to purchase telecommunications equipment produced in India -- was moving into a final review stage before it is fully implemented – a move that ITI and other global business and policy leaders fear would jeopardize the global system of trade that has been so valuable to the world’s economy.

Listen to a preview: Dean talks about two challenges to a fair and open trade system continuing between the U.S. and India – the PMA policy proposal and the lack of Indian engagement on the Information Technology Agreement expansion.

In his testimony, Dean also will discuss India’s refusal to fully participate in a multilateral effort to expand the Information Technology Agreement – perhaps the most commercially successful World Trade Organization trade agreement ever. Momentum is building to complete the ITA expansion talks in Geneva this year, a move that would be a major trade win for the U.S. and global economies, including India. As we’ve discussed before on this blog, ITA expansion could remove tariffs on at least an additional $800 billion in ICT trade globally, a 20 percent increase over the $4 trillion now covered annually. For India specifically, ITIF reports that:

“India has set a goal to increase its ICT exports thirteen-fold from $5.5 billion today to $80 billion by 2020. Certainly India is well-positioned to tap into the global growth in consumption of ICT products (and services). Participating in ITA expansion will only facilitate India’s realization of this goal, for ITA expansion will increase the size of the global marketplace for ICT products and services, giving India a larger market in which to export its ICT products and services.”

It would be a major benefit – both for India as well as the world – if the Government of India would engage constructively and directly in the ITA expansion talks underway in Geneva. The ITA has been a valuable component in the growth of a global ICT industry dominated by the U.S. and India.

The House hearing starts at 10 a.m. ET. We’ll have follow-up and analysis on the blog.

Public Policy Tags: Trade & Investment, Forced Localization