India's telecommunications security threat to WTO compliance: US Chambers

India remains a challenging market for Intellectual Property-intensive investment even as the Indo-US commercial relationship provides significant opportunities for bilateral trade, a top American trade body has told the Trump administration.

The US Chambers of Commerce, in a submission to the US Trade Representatives of its Special 301 Review, said that its members observed some positive developments in 2017 but overall there were mixed policy signals from India, which continue to stall the overall IP and innovation landscape for industry.

"While the US-India commercial relationship poses significant opportunities for bilateral trade, India remains a challenging market for IP-intensive investment," the US Chambers of Commerce said.
 

The Chambers noted that level and frequency of engagement between the US and Indian governments in 2017 continued to be a source of hope for the future, marked by ongoing dialogue on a broad range of IP rights issues between the two countries under the Trade Policy Forum and the Commercial Dialogue.

"We are encouraged that both sides exchanged thoughts on a range of market access barriers in India, including the protection and enforcement of IP rights, and committed to further engagement in an effort to achieve concrete outcomes leading up to the 2018 dialogue and beyond," it said.

The decrease in the US trade deficit in goods with India over the past year is a testament to the actions and policies of both governments to benefit American workers and jobs, the Chambers said and strongly hoped that continued discussion will ensure a return of fair value to innovators and greater access to innovation for Indians.

It expressed concern about the new Draft Pharmaceutical Policy proposed by India's Department of Pharmaceuticals.

On the one hand, it is forward-looking in its approach: It recognises the high risks and high costs of entry to the bio-pharmaceutical sector at the firm level and suggests the need for sufficient economic incentives, combined with a high degree of legal certainty, to make the risks sustainable over the long life-cycle that connects R&D to financing to product development and commercialisation.

"On the other hand, while patented medicines are excluded from price controls, the draft policy explicitly reserves the right to issue compulsory licenses," it said.

An active compulsory licensing mechanism and a government bias towards its use is the most extreme option; it signals to innovative investors that patent rights are discretionary, largely undermining the critical forward-looking aspects of this draft policy.

Furthermore, pricing that does not properly value innovation has the impact of undermining and devaluing IP and access to innovation.

"We would welcome an approach that is predicated on consistency, transparency, predictability, and return of fair value for innovation," the Chambers said.

In its submission, it charged that India championed the weakening of IP rights in multilateral organisations, including WIPO and the WHO.

The US industry continues to be concerned by the potential threat of compulsory licensing, it said.

While no additional compulsory licenses for biopharmaceuticals were issued by Indian authorities in 2017, India continues to examine potential compulsory licenses under Section 92, and Indian companies continued to seek compulsory licenses under Section 84.

"We continue to urge the Modi government to repudiate the use of compulsory licenses as a commercial tool," it said.

The Chambers said not only do India's new telecommunications security requirements raise potential WTO compliance concerns, but if they remain unchallenged, other governments may use them to justify their own elaborate information security regimes.

"In other words, India's approach is establishing a dangerous precedent for governments that may be inclined to use national security claims in a way that is detrimental to global ICT trade," it said.

As such it asked the US Trade Representatives that it should urge India to continue to work closely with all stakeholders, including global telecommunications service providers and equipment vendors to ensure that implementation of the telecommunications security provisions do not undermine basic IP protection, nor create obligations outside of global norms that inhibit market access.