A senior official at the US trade representatives office (USTR) has said India can no longer justify its stringent quantitative import licensing requirements on the balance of payments crisis it faced in 1991.
Rich Ruzicka, deputy assistant USTR said, India does not have a balance of payments crisis any more, so there is no justification for restrictive import licensing.
Ruzicka, who has the primary responsibility for developing policy and negotiating trade and investment agreements with India, Pakistan and other countries in South Asia and Korea, said despite India having overcome its balance of payments crisis more than four years ago, New Delhi still clung on to an erstwhile GATT (General Agreement on Tariff and Trade) rule under the new WTO (World Trade Organisation) to continue its restrictive import licensing policies.
Speaking at the 22nd annual meeting of the US-India Business Council, he noted that using GATT 1994 article 18:B, which allows for tall tariff walls for countries undergoing adjustment problems because of permeating balance of payments crises, India continued to eschew deregulation.
Ruzicka, who came armed with a copy of the India section of USTRs 1997 National Trade Estimate Report on Foreign Trade Barriers, said Indias restrictive import licensing procedures represented significant barriers to doing business in India.
He read the India section of the USTR report, which was sent to US Congress last month, page by page. The report said despite recent tariff reductions and liberalisation of quantitative restrictions, Indias restrictions on consumer goods imports, quantitative restrictions under the negative (restricted imports) list and high tariffs remain serious impediments to US trade, especially for agricultural and consumer items.
It noted that the US continues to raise and discuss Indias restrictive trade practices in all trade-related meetings in the WTO and in regular bilateral consultations.Ruzicka issued some subtle warning to India saying that its a global market today and that if India does not unshackle itself from some of its entrenched and restrictive import licensing policies, there were lots of untested markets that American investors and products manufacturers could flock to.Paula Stern, president of the Stern Group Inc, an international trade advisory firm, declared: India is at crossroads it must decide to move ahead with economic reform or slip backward.
Stern, former chair of the US international trade commission and a member of the Presidents advisory committee on Trade Policy and Negotiation (ACTPN), said In stark terms, the road to the future could look like Indias info-highway or a rutted bullock track.
She said India clearly has the potential to join China as one of the worlds new economic powerhouses and emphasised that on its 50th anniversary of its independence it is time to declare economic independence from Indias government regulators.
Stern said that during her recent trip to India, she was convinced that India is ideologically committed to taking the road to economic liberalisation. Thus the question now, she said, is not so much the direction, but the velocity of Indias travels. Politicians and bureaucrats can ease the way, or act as roadblocks.Stern said Indians and Indian Americans working for American companies doing business in India, could serve as a bridge and the fact that India was a democracy could give India the comparative edge over authoritarian China.
She pointed out that China, a common benchmark for India, was neither a member of the WTO nor a democracy.
As Indias relationships develop with the US and other like minded nations that express concern about trading rights, intellectual property rights and human rights, the political benefits of being a democracy should not be underestimated, she said.
India, Stern advised, should take note as it enviously compares Chinas yearly total of $40 billion in foreign direct investment to Indias tiny sum of $2 billion in FDI. She declared, the potential in India for growth, for growth that can be lasting, is enormous.
India can benefit from how it presents it economic reforms to the world, particularly in how it packages its liberalisation vis-a-vis US-India bilateral relations and vis-a-vis Indias multilateral negotiations at the WTO, she said.
Stern said that over the years India has demonstrated multilateral leadership in the United Nations and among the so-called non-aligned countries. Now the mark of leadership should also be demonstrated in the realm of trade multilateralism.
According to her, Indias past practice of being the last to jump on board GATT and WTO agreements, including the latest information technology agreements, has given the wrong signals to potential corporate suitors that those at the helm have allowed Indias ship of trade to shift.
Stern emphasised that deregulation and market access are win-win strategies for India and the rest of the world and reiterated that to become an economic powerhouse, India has no choice but to move ahead by eliminating roadblocks or else be stuck in a bullock track.
