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Michael Froman, who was appointed the US Trade Representative (USTR) on June 21, is President Barack Obama's principal advisor, negotiator and spokesperson on international trade and investment issues. In an interview with Nayanima Basu, he says India remains on his country's priority watch list because of weak IPR laws. Edited excerpts:
What are some of the main concerns US industry has on Indian economic policies? Would we be able to achieve the bilateral trade target of $100 billion?
The US government shares concerns of US industry regarding Indian policies affecting investment and innovation. These include localisation measures which give preferential treatment to products manufactured in India or those which use domestically developed intellectual property, as well as insufficient protection and enforcement for intellectual property rights, and also unpredictability and inadequate transparency in the tax and regulatory environments. The goal of $100 billion in bilateral goods and services trade is already well within reach.
Did you raise these issues during your meeting with Finance Minister P Chidambaram and Minister of Commerce and Industry Anand Sharma last week? What sort of an assurance did you get?
We discussed actions which could be taken to enhance the investment and innovation environment in India and strengthen the economic component of our strategic relationship. The ministers committed to maintaining an open, constructive dialogue with industry to ensure all perspectives were heard with a view to taking prompt and appropriate actions to improve investor confidence in India. Minister Sharma and I also agreed on the importance of a strong, regularised and sustained dialogue on trade and investment issues between our two governments.
Do you think the US government will go ahead with the immigration reforms Bill, despite sharp criticism in India, because Indian IT companies corner most of the H1B and L1 visas? Why is the US attempting to restrict the mobility of skilled professionals from India?
India is the single largest beneficiary of H-1B and L-1 visas. In FY 2012, Indian nationals received more than 54 per cent of all H-1B visas, and more than 26 percent of all L-1 visas issued worldwide. Common-sense reform of the US immigration system is a top priority of this administration. This week, we emphasised to our Indian counterparts that successful reform can be a boost for trade and investment, both by ensuring that the US economy continues to be able to attract the world's brightest minds, and by increasing opportunities for talented workers to bring their entrepreneurial skills to the US.
What are some of the main concerns of US industry on India's IPR regime? Why is it that the US continues to keep India on the priority watch list, as mentioned in the Special 301 report?
IPR protection and enforcement challenges raise serious questions regarding the innovation climate in India across multiple sectors and disciplines. The US business community has become increasingly vocal in recent months about certain policies, especially regarding copyright and patents, and it would be good for India's investment climate for these concerns to be addressed.
India remained on the priority watch list in this year's Special 301 report because of continuing weaknesses in its legal framework and enforcement system for intellectual property rights.
In your meeting with ministers Chidambaram and Sharma last week, did you discuss the issue of Basmati rice , which has been put on import alert?
We talked generally about the importance of agricultural trade to the success of the US-India trade and investment relationship.
We recognise the value of ongoing exchanges of views in this sector, and we all agreed that our expert staff should have discussions without delay on the full range of bilateral agricultural trade issues.
What is the response you get when you talk to companies like Walmart, Boeing, Lockheed Martin and the like? Are they still interested to invest in India, because it seems that the US does not find India an attractive destination anymore?
What I hear is that US firms are interested in a long-term partnership with India. They see the potential for a growing, vibrant market that has the capacity to make large strides in its economic development in the coming years. It is precisely because they are so interested, however, that they have highlighted a number of concerns that have led to a cooling of interest in investing in India. US firms, like the US government, are eager to work with India to find ways forward that would return India to its high-growth trajectory.
Why has the US decided to keep the Totalisation Agreement which had been a long pending demand by Indian industry on the back-burner? What is the status of the deal presently?
The US can only enter into totalisation agreements that meet specific, objective criteria in US law, including the requirement that the other country's social security system cover a substantial proportion of its population.
Over several years of discussions with the US Social Security Administration, India has recognised that its social security system does not meet this requirement. We have listened closely to India's request for a totalisation agreement, and understand that this has been an important issue for India for the past several years. As India's social welfare regime changes, circumstances might then allow us to explore the possibility of such an agreement. That would be a welcome development.
With a range of disputes lying at the World Trade Organisation dispute panel, do you think the outcome would impact India-US strategic relations?
Dispute settlement is a normal part of relations between trading partners in the WTO and can be a useful way to move forward on an issue where dialogue has not succeeded so far. The US remains committed to a strong strategic relationship with India, and looks forward to continuing our work together to grow that relationship further, including by increasing trade and investment flows between our two countries.
Coming to the Doha talks and upcoming Bali ministerial, why is the US trying to single out India in its intention to get an agreement on food security signed under during the Bali ministerial? How willing are you to sign the trade facilitation agreement?
As I said to the US-India Business Council this week, even as we are willing to work with India to address its legitimate food security needs - which we recognise - we must underscore the importance of doing so in a way that minimises the distortion of global trade. India has emphasised the significance it attaches to its food stockholding proposal, and the US has said plainly that food security in developing countries is important for the WTO to address.
No country has been more at the forefront of advancing food security than the US.
There is the potential to do something quite meaningful in Bali - to agree on a trade facilitation agreement that would significantly reduce costly frictions at borders that damage competitiveness, particularly for developing countries, but we have a lot of work to do. It continues to be the hope of the US that all WTO Members would make good-faith efforts to deliver that package of meaningful outcomes in Bali.
What is the future of US-EU FTA talks and its likely impact on India?
The first round of talks for the Transatlantic Trade and Investment Partnership concluded Friday after a productive week of discussions in Washington, DC. US bilateral and regional free trade agreements, because of their comprehensive duty elimination and breadth of commitments, produce significant benefits both for our negotiating partners and for other trading partners, through expanding economic growth and further strengthening of the global trading system.
