A backward step

Why is India still on the US' IPR watch list?

The Office of the United States Trade Representative (USTR) has once again placed India on its priority watch list, citing what it believes to be India's poor record in protecting intellectual property rights (IPRs). Alongside India, 11 other countries have also been similarly categorised. This repeats the action taken last year, which then led to an out-of-cycle review of India's IPR regime. The 2014 action took place before the first of two summit meetings between Prime Minister Narendra Modi and President Barack Obama. That meeting resulted in the setting up of a joint working group. During the working group meeting in New Delhi in November, the USTR acknowledged that the United States was seeing progress on the bilateral IPR front. In December, on the conclusion of the out-of-cycle review, the report was quoted in this newspaper as lauding India's efforts to have a "meaningful, sustained and effective dialogue on IPR issues". It further quoted a US official saying that the new government had taken some "baby steps towards improving the country's weak IPR laws".

On the Indian side, while an IPR review committee was constituted after the first summit meeting, concerns were expressed about bilateral perspectives overriding the multilateral framework to which India was a signatory. This is the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement, which is part of the World Trade Organization (WTO)'s jurisdiction. After signing the agreement, India made significant amendments to its IPR legal framework. Its law has not been significantly challenged at the WTO. Naturally, any effort on India's part to restructure its IPR regime must be motivated entirely by its own interests in encouraging innovation and technological advancement. To be perceived to be doing it under US pressure would undermine the credibility of the changes.

In any event, the US refusal to remove India from the list seems to contradict the apparent progress made by the two sides towards the end of 2014, and is a negative signal for the bilateral relationship. Clearly, the US government continues to be influenced by domestic stakeholders who are feeling competitive pressure from Indian producers. To the extent that India's producers were being competitive while remaining within the boundaries of TRIPS, the US government's use of this bilateral sledgehammer is worrying. The previous signals were all pointing towards some convergence between the two sides.

While the bilateral relationship between the United States and India is multifaceted and a setback on a single issue does not unduly threaten the gains made during the two summit meetings, the IPR impasse does represent a significant backward step. All said and done, the economic relationship between the two countries, both present and future, is significantly framed around technology. Foreign direct investment in both directions also reflects this. If the United States maintains an antagonistic posture on IPR, the bilateral trade and investment climate will unquestionably be vitiated. Both countries must follow up meaningfully on the official statements made in November and December 2014.