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The US needs to start negotiations with India on free trade pact and help it become a member of the Asia Pacific Economic Co-operation, which will also enormously benefit America, an expert here has said.
Testifying before a Congressional Committee yesterday, Dan Twining, Senior Fellow for Asia at the German Marshall Fund of the US, told lawmakers that regrettably the Barack Obama administration's signature trade initiatives, TPP (Trans Pacific Partnership) and TTIP (Transatlantic Trade Investment Partnership), do not include India.
He added that a primary economic initiative between the two countries has been a modest bilateral investment treaty, which has been stuck in the bowels of the bureaucracy for years.
"At the same time, India has enacted or is negotiating trade agreements with Japan, the EU, ASEAN and a number of other partners, but not the United States," Twining said.
Although India is part of Asia's security architecture, it's not part of Asia's economic architecture, he said, adding that the country's exclusion from APEC makes little sense for a country that sits in the middle of Asia. Besides, it is an important trading partner to America, China and Japan, and has an economy that will comprise nearly 20% of global GDP by 2060 according to the OECD.
Twining said that so as to elevate the bilateral economic relations to the strategic level, he believes America and India should launch negotiations for a Free Trade Agreement.
"India will have to undertake far-reaching domestic reforms to qualify. New Delhi might find it easier to undertake these reforms if it can do so as part of a process of acceding to APEC.
"This will take time, but the requirements of membership could incentivise an Indian system wary of reform, the political costs of reform, to pursue aggressive liberalisation," Twining argued.
The prize of eventual APEC membership, coupled with an eventual FTA with America can empower economic reformers within the Indian system and mobilise the Indian private sector which is frankly quite fed up with the government's slow pace of reform, Twining said.
Skeptics will argue correctly that Indian officials have been among the most obstreperous opponents of the US trade agenda in venues like the WTO. "This is true," he said.
