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FDI shadow on India-US bilateral treaty talks

Indira Kannan  |  Toronto 

Concerns about delays in opening up foreign direct investment across various sectors in India were among the issues raised by those attending a briefing by the United States Trade Representative’s office and the state department on the status of negotiations on the India-US bilateral investment treaty (BIT) in Washington, on Thursday.

Access to India’s insurance market was a particular concern for US firms, according to some persons present at the briefing, who spoke on the condition of anonymity, as the event was closed to the media.

The briefing was attended by several dozen members of the US India Business Council, or USIBC, and the Emergency Committee for American Trade, or ECAT, and included representatives from both American and Indian companies.

The briefing was held in advance of technical discussions on the scheduled for October 17. This will be the first round of talks between the two countries since an initial round was held in August 2009. The process was launched in 2008 under the administration. Negotiations were put on hold after the incoming administration launched an internal review of the country’s model text.

No indication was given during Thursday’s briefing by US officials about the timeframe for completion of the review.

The officials also did not discuss a possible timetable for the BIT talks at Thursday’s briefing. Commerce Minister Anand Sharma had told Business Standard late last month that two rounds of negotiations would be completed before the next bilateral Trade Policy Forum in January.

The US Congress approved three free trade agreements (FTAs) — with South Korea, Panama and Colombia — only this week, several years after they were signed by the previous administration, following delays due to issues raised mostly by members and supporters of the Democratic Party. However and ECAT, which have been lobbying the US government in favour of the BIT with India, believe it will get bipartisan support.

According to Anku Nath, director for Trade Policy Advocacy at USIBC, while the India-US BIT is not yet very well known on Capitol Hill, “reactions amongst policy makers to moving forward on a BIT with India have so far been broadly positive”.

“US industry is very excited about the BIT negotiations with India, we’d love to see them restarted,” says Linda Menghetti, Vice President of She points out that a BIT only has to be cleared by the US Senate, unlike an FTA, which needs to go through the House of Representatives as well. “Two weeks ago, the US Senate unanimously approved a BIT with Rwanda, which was negotiated under the Bush administration,” says Menghetti, adding that this bodes well for bipartisan support for a strong treaty with India.

However, it could be a long time before it reaches Capitol Hill. Menghetti and Nath say the typical time frame for concluding a BIT could range from several months and perhaps up to a few years, depending on various factors, including economic conditions and the countries involved. According to Nath, the clock would start ticking on the India-US BIT only now, as talks are still in the beginning stage.

First Published: Sat, October 15 2011. 00:10 IST