India, US to discuss trade irritants

India and the US are set to address some of the prickly issues that have acted as major irritants in the commercial relations between both countries recently, to ensure greater flow of trade and investment. The issues would be raised during the India-US commercial dialogue (IUSCD) likely to take place by the middle of next month.

Both countries would discuss ways to address some thorny issues hampering the growth of bilateral trade. Some relate to the recent raise in fees for professional visas by the US, imposition of a special tax on foreign companies and introduction of tariff and non-tariff barriers. And, Indian keenness on a totalisation agreement, according to a senior official in the Department of Commerce.

The IUSCD will be essentially presided over by commerce secretary Rahul Khullar and the US undersecretary of commerce for international trade, Francisco Sánchez. The focus areas are standards, anti-dumping duties and practices, small-scale industries and protection and enforcement of intellectual property rights.

For a long time, India had been demanding easier access for mangoes but the US has been unwilling to lower the standards or provide any other form of support to enable Indian-produced fruit to make it to its local markets. This issue is also likely to be discussed during the meeting.

High targets
Bilateral trade is $50 billion annually and both sides have vowed to increase it significantly. Recent moves by the US government have been regarded by the Indians as protectionist. However, trade has been on an upward path despite the differences.

The US government has set a target of doubling its exports in the next five years, that will generate two million jobs. It is significantly eyeing Indian markets to achieve this aim. Between 2002 and 2009, US goods’ exports to India quadrupled, growing from $4.1 bn to more than $16.4 bn, while its services exports to India tripled to $10.5 bn in 2008 from $3.3 bn in 2002, making India the 17th largest market for US exports, according to US Embassy statistics.

After the visit of US president Barack Obama to India last year, the US government removed nine Indian space and defence-related companies, including those from the Indian Space Research Organisation and Defense Research and Development Organisation, from its banned 'Entity List'. The move is expected to bolster high-technology trade between the two countries.

Earlier this month, US commerce secretary Gary Locke urged India to remove tariff and non-tariff barriers, restrictions on foreign direct investment and improve the protection on intellectual property rights to realise the full potential of cooperation.

New ideas
Both countries also looking at setting up a $10-bn infrastructure debt fund to finance some large-scale public-private-partnership (PPP) projects in development of India’s poor roads, highways, bridges, ports and railways.

During the last ministerial round of the India-US trade policy forum, in September 2010, commerce and industry minister Anand Sharma was learnt to have raised the issue of establishing the Totalisation Agreement, a long-pending demand by India. Under this, Indians who go to US to work for a stipulated amount of time would not have to pay the social security tax there. At present, Indians working there on a short-term basis pay the tax but are not entitled to enjoy the benefit in return.

Sharma had also expressed India's desire to start negotiations for a far-reaching trade agreement between India and the US, to take trade relations to the next level. The proposal has not seen much encouragement from the US side.