U.S. groups criticize India drug, tech, farm policies

By Doug Palmer

WASHINGTON (Reuters) - U.S. industry groups on Wednesday called for the United States to increase pressure on India to reform high-tech, agricultural and pharmaceutical policies they said block U.S. exports and damage patent rights.

"India has essentially created a protectionist regime that harms U.S. job creators" in favor of the country's generic drug manufacturers, Roy Waldron, chief intellectual property counsel for Pfizer , said in testimony to the House of Representative Ways and Means trade subcommittee.

Waldron complained that last year India revoked Pfizer's patent for a cancer medicine, Sutent, "to allow Indian generic companies to manufacture and sell generic copies."

India also abuses compulsory licenses, which governments are supposed to use in limited circumstances to suspend drug patents, for the benefit of its domestic firms, he said.

Waldron urged U.S. government officials to vigorously pursue those concerns in direct talks with India and to "review all available policy tools" to pressure the world's largest democracy to better protect U.S. intellectual property.

The hearing comes as U.S. trade benefits for India are up for renewal under the Generalized System of Preferences program, which waives duties on thousands of goods from developing countries to help them create jobs.

"I want to ensure that U.S. job creators can compete there on a level playing field," said Representative Devin Nunes of California, the Republican chairman of the Ways and Means trade subcommittee, noting India's market of 1.2 billion people should offer huge potential for U.S. companies.

WTO OPTION

India is the largest recipient of benefits under the GSP program, which expires on July 31. It exported $3.7 billion worth of goods to the United States under the program in 2011, or roughly one-tenth of its total exports to the United States.

It does make sense to examine whether India should be removed from the GSP program given its growth in recent years, but it might be a mistake to portray that as an effort to punish the country, said Arvind Subramanian, a senior fellow at the Peterson Institute for International Economics.

"I would be a little hesitant about using that" since the move is probably not strong enough to change India's behavior, but would be seen in New Delhi as trade retaliation and damage the United States diplomatically, Subramanian said.

A better but more time-consuming option would be challenging more of India's policies at the World Trade Organization in the hope of winning rulings that would increase pressure on the government to reform, he said.

Last month, the U.S. Trade Representative's office filed a WTO case against elements of India's national solar energy program that it said discriminated against foreign producers in violation of a global trade rule.

It has also challenged India's restrictions on U.S. poultry in a case that is to be decided by the end of this year.

PROCUREMENT PAINS

Meanwhile, U.S. technology companies are frustrated by Indian government procurement policies that favor Indian electronics products over foreign, Dean Garfield, president of the Information Technology Industry Council, told the panel.

"The PMA (preferential market access) policy certainly does not bode well for our industry, threatening to shut us out of a significant portion of the Indian ICT (Information and communications technology) market," Garfield said.

U.S. companies are also disappointed that India is sitting on the sidelines in talks in Geneva aimed at expanding the 1996 Information Technology Agreement, which eliminated duties on scores of high-tech goods, he said.

India also has steep agricultural tariffs and regulatory barriers that keep out many U.S. farm exports, said Allen Johnson, a former U.S. chief agricultural trade negotiator.

Last year, India's agricultural exports to the United States topped $5 billion, a ten-fold increase since 1995, Johnson said. In comparison, U.S. farm exports to India last year were only $900 million, well below their potential, he said.

India's reluctance to reduce its farm tariffs has frustrated the United States in the long-stalled Doha round of world trade talks, Johnson said.

(Reporting by Doug Palmer; Editing by Vicki Allen)