Nisha Biswal, President of the US-India Business Council, talks about the US-India Trade Policy Forum (TPF) next week, CAATSA sanctions, the Biden administration’s trade priorities and more. Edited excerpts from an interview:
Should much progress be expected when Commerce Minister Piyush Goyal meets with US Trade Representative (USTR) Katherine Tai for the TPF, in terms of addressing the issues that have become lingering in digital trade, agriculture, medical devices, SPG, etc. ?
My own expectation, based on conversations with the two governments, is that this is really a more fundamental meeting – the first meeting between Ambassador Tai and Minister Goyal. It’s really about trying to restore some of the institutional and fundamental processes like the Trade Policy Forum. And, therefore, I don’t expect that there will be any major results that will be announced.
But I think it’s an opportunity for both governments to align expectations, align approaches and maybe create a roadmap for where they want to go. So if they can, in the process of doing that, try to push forward a few key results – I think we would welcome that. We believe there are things that are ready to be worked out that both governments and countries have invested a lot of time and effort in trying to resolve. And I think they should try to do a few of these things.
There is a feeling that the United States is currently unwilling to negotiate a major trade deal with India and wants to resolve the smaller outstanding issues first. Should this be seen as a general approach by the Biden administration to resolve existing problems before embarking on more ambitious agreements, as it did with Europe and the aeronautics dispute?
Well, the Biden administration has made it clear that it is not currently focusing on negotiating trade deals, but rather on the issue of national competitiveness and the national economy. I think it is a mistake to think of domestic competitiveness and the resurgence of the US economy as separate or isolated from entering into trade deals with our close trading partners. I think the two go hand in hand, especially since the majority or a very significant portion of American jobs are export-related jobs.
Having said that, I’m not sure if the trade conversations between the United States and India to date have prepared to immediately jump into a conversation about an FTA. I think there is interest and openness on the Indian side in a way that we may not have seen before, to go down the path of an FTA. And I think the Biden administration should look into that opening.
What would be the impact on bilateral trade of possible sanctions by Washington’s CAATSA against New Delhi for taking delivery of the S-400?
Well, first of all, I don’t believe and certainly don’t think that sanctions should be applied to India. We have been very clear in the US-India Business Council, in the US House, that we believe that sanctions against one of our closest and most important partners are inappropriate and counterproductive and that ‘There are certainly legitimate concerns regarding the implementation of S-400 in terms of the impact on American technology and on interoperability between the United States and India. These are things that both governments need to sort out, but nowhere in this equation do sanctions advance the interests of either country and the partnership.
Having said that, I think there are so many issues at stake for both countries that no matter what, whether on the CAATSA front or any other front, both countries have a compelling strategic interest in work on all areas of divergence, because areas of convergence are of critical importance to both governments.
So in a hypothetical scenario where there are sanctions, do you see that it affects the trade?
Inevitably, this will affect many different areas. I don’t know if making assumptions is productive. I think it’s hard to know. Obviously, an application of sanctions would disappoint and even irritate many on the Indian side and what would be the implications? I do not know. I don’t think we should take this chance.
Should we expect labor and environmental standards to be on the table on the American side when it is finally ready to discuss a broader trade deal with India?
Well, it’s certainly important for the Biden administration and historically has been important for the Democratic Party to ensure that there is proper discussion and treatment of labor standards and the environment. And frankly, on environmental factors, it has become even more imperative in the current situation on climate change and the climate crisis.
Work and the environment don’t necessarily have to be an issue as I think the Indian government also has strong views on the climate challenges it faces, and I think these may be areas where both can actually be found. common ground and some areas of collaboration.
As for the Generalized System of Preferences (GSP), is that more on the table, given that it is no longer just the Biden administration to admit India back into the program, but first a question of when the US Congress will re-authorize the program?
I think that should be on the table and I think the SPG program is a very important program. Certainly we in the United States House urge Congress to reinstate this program. And we believe that a restored PGS program should include India as one of the major partner and beneficiary countries. I think it’s a win-win for the United States and for India.
Given that the GSP needs to be re-authorized by Congress, what do you think are the areas in which the Biden administration can act that could be of interest to India?
Well, I think there are many areas where the United States and India need to work together. Of course, the digital economy is increasingly important for both countries. And being able to support growth in this area should be a priority for both governments to strike deals that shape this digital ecosystem, so that we don’t have fragmentation, [and] we don’t have conflicting regulations that make it harder for US and Indian businesses to engage in digital commerce and grow the digital marketplace.
In the field of life sciences, we have seen that pharmaceutical supply chains are of crucial importance. India is playing a very important role in supporting the global vaccine supply in the context of the COVID-19 pandemic. This only underscores the priority and importance of trying to resolve some of the challenges between the United States and India. Seeing more US investment and more US manufacturing in the life science space moving to India, I think, would advance the goals and objectives of countries and industries… so that should be another area of focus. key interest during these conversations.
India is looking to see how it can attract more supply chains and a lot of that is about market access. And there are some areas where India is looking for better access to the US market, so there is an opportunity for both countries to really start thinking about the key areas they want to align with.
U.S. COVID-19 vaccines are not yet available in India due to prolonged discussions between vaccine makers and the Indian government. Can you tell us when we can expect a resolution from these talks?
I have no idea when. For many weeks, if not months, we have been hearing that this is imminent and I know that there are issues that need to be addressed, especially issues of compensation for those in emergency situations.
Now that some of the vaccines are starting to move away from emergency use and become fully authorized [use], that could change the calculation.
But listen, I think the question is less important because India is also very far along with its vaccination targets. Certainly, greater availability of more vaccines would benefit the Indian people and accelerate immunization targets. But I also think that the larger goal of the vaccine makers at this point is to partner with India in production to advance the global supply.
In 2019, you said, in the context of the US-China trade tensions, that India should play a bigger role for companies leaving China because they were going to Vietnam, Cambodia and other countries. . And you said complacency is something to be avoided. What is your assessment of the situation today, with two years of hindsight and in this new context? What does India need to do to attract these supply chains?
I think the problems are still the same. I would like to commend the Indian government for some important steps that have been taken including the PLI [Production Linked Incentive] programs designed to incentivize and attract investment in the manufacturing sector in key sectors. And I think this is all very useful and I see companies starting to take advantage of it. I think that the further liberalization of FDI in certain sectors is also another very positive signal. The policy of repealing retroactive tax liability, I think, [is] another big step.
Companies are looking to reduce risk, diversify and regionalize their supply chains to be closer to markets, rather than bringing everything together in one place. That said, moving a supply chain is a big expense. It is also a long process. You’re not going to displace an entire supply chain ecosystem. This is going to be done in stages and therefore requires a much more flexible environment in terms of local content requirements and the like, as not all of the materials needed for most of these supply chains are locally available.
So I think you have to address market access because for a supply chain to relocate it has to have the market that is going to support it. You need to have regulatory transparency and stability because it’s a high investment move to move supply chains. You have to be able to have some stability over a period of time that is going to require moving that supply chain and getting, essentially, the return on your investment. [return on investment] on that. So I think a more holistic approach in India on policy – policy coherence – is a stable and consistent approach in how it deals with these new inbound investments.
(With contributions from Suhasini Haidar)