Obviously taking off from the background of highly successful Indo-US services negotiations in the WTO, the think tank, the Council on Foreign Relations (CFR) suggests that such an accord would allay Indian concerns about the growing threat of restrictions on outsourcing and will address New Delhi's fears of political pressure for "buy America" restrictions like the one considered recently in New Jersey.
This recommendation is part of a report on US policy towards India, Pakistan and Afghanistan, authored by an eminent team of experts on south Asia including former US Ambassador to India, Frank Wisner.
The report says negotiating a bilateral services agreement represents a challenge because there is no precedent for an agreement limited to services, also, because of the complexity of issues involved. However, it would significantly advance Indo-US relations and have a global significance because it would be a model for similar agreements with other countries.
The CFR says that it is in the US's interest to show continued sensitivity to India's concerns as a developing country and in India's interests to "avoid taking positions that echo pre-reform ideology". It points out that in recent years the US has concluded a number of free trade arrangements with several countries.
With India, however, a "standard" free trade agreement doesn't seem practical, because India would have to make substantially higher concessions because of far higher tariff levels. This would bring in its wake political opposition to the whole exercise.
It warns that there would be opposition to such agreement from US industry (textiles, particularly) which would feel threatened by a possible surge in imports under a free trade agreement with India. There would be no such difficulties in a trade agreement in services.
