India junks US trade report, calls it 'invalid'

Report says US imports are facing stringent trade barriers in India

In what could spoil the atmospherics before the visit of US President Barack Obama here next month, India on Wednesday refuted US International Trade Commission (USITC)’s claims that US imports are facing stringent trade barriers in India. India said the issue has not been taken up by the US government bilaterally or multilaterally and hence has “no validity.”

The USITC report titled Trade, Investment, and Industrial Policies in India: Effects on the US Economy was prepared at the behest of the House Committee on Ways and Means and the Senate Committee on Finance.

“This is a unilateral action that has no validity whatsoever. India was not party to the investigations and it is the US’ internal decision. The US government has not taken up the matter bilaterally or multilaterally with us. India’s position remains the same as it was last year,” a senior government official told Business Standard.

The official said these issues keep coming up during every high-level visit of the US government.This is the second such report released by the USITC on the tariff and non-tariff trade barriers US products face in India. The investigation that preceded this report was launched in November.

Incidentally, all these matters were also thrashed out during the recent US-India Trade Policy Forum meet that was also held in November for which US Trade Representative Michael Froman met Commerce Minister Nirmala Sitharaman.

USITC is a quasi-judicial federal agency entrusted with the work of carrying out investigations on bilateral trade and investment matters. It plans to hold a public hearing on Indian trade policies on April 7, 2015.

Notably, some US-based lobby groups have supported the USITC report that takes a grim view of India's trade practices.

“The report is useful in documenting the challenges US business faces in India; it also shows the potential benefits to both economies from addressing existing trade barriers. For example, the report identifies improved IP protection would have substantial positive effects on US exports to India and increased economic engagement in India,” said Mark Grayson, deputy president, Pharmaceutical Research and Manufacturers of America.

India and the US recently concluded a couple of disputes that had been pending at the World Trade Organization’s (WTO) dispute settlement body on steel and poultry products.

In the case of steel exports made from India to the US, the WTO has ruled in favour of India. The matter was related to the duties imposed by the US on Indian steel products. However, India lost the case on poultry products imported from the US.

India also enjoys a trade surplus with the US. In 2013-2014, exports to that country reached $39.14 billion and imports from US stood at $22.50 billion.

In its report, the USITC has stated that Indian policies and tariff measures are adversely impacting American exports.

These include tariffs and customs procedures, foreign direct investment restrictions, local-content requirements, treatment of intellectual property, taxes and financial regulations, regulatory uncertainty, and other non-tariff measures such as unclear legal liability, price controls, and sanitary and phytosanitary standards.