India-US trade stand-off: a tale of two reports

The television drama The West Wing , set in the White House, bears an uncanny resemblance to the trade tug-of-war seen at present between India and the US. Recent episodes of the programme show US officials getting involved in heated back-room activity on intellectual property (IP) and protests from US knowledge-worker unions as jobs get “vacuumed” out to India.

The political drama may not be too far from the truth, as India finds itself in the eye of a trade-related storm in the US, with much of the fury directed at India’s track-record of protecting IP, after the country amended its Patents Act in 2005.

In fact, two US reports are expected, in April and November, assessing India’s performance on IP protection and trade policies, respectively.

And while US trade and Government representatives voice their anxiety over India’s “deteriorating” IP environment, India has stood its ground, insisting that its laws were in line with commitments to World Trade Organization-led agreements.

At the heart of these highly-charged discussions are concerns over market access for businesses in both countries. After all, trade negotiations involve a give and take. That’s why there is no ignoring the two US reports and their possible impact on contentious issues, including IP protection (of data generated during research) and clinical trials (testing drugs on humans).

In fact, the new Government that will take over after the elections could well be walking into a trade minefield, if both reports paint India as a difficult terrain to do business in. It would leave India less head-room to negotiate, forcing policymakers to concede on some issues, say industry watchers.

With stakes being high, discussions leading up to these reports are no less dramatic, punctuated with late-night conference calls by US trade representatives to explain to Indian media why they felt they were getting the short-end of the stick from Indian trade policies.

The US Chamber of Commerce’s Global Intellectual Property Center (GIPC) pegged India at the bottom of 25 countries, in its International IP Index report.

By highlighting countries leading or lagging in fostering a strong IP framework, the GIPC Index provides a tool for policymakers to strengthen innovative potential and for business leaders to assess risk and investment, the GIPC note explained.

To counter such views, Indian industry representatives flew to Washington last month to explain India’s trade policies to the US International Trade Commission (USITC).

Triggered by trade and Government complaints against India, the USITC was investigating the impact of India’s trade policies on American companies and jobs. Its report is expected in November.

On a parallel track, discussions are also under way leading to the US’ Special 301 report, slated this April. The annual exercise evaluates US trading partners on their IP protection record.

In its 301 submission, GIPC suggested that India be designated a “Priority Foreign Country, given the rapid deterioration of the nation’s IP environment”.

A key grouse for US trade involves implementation of the Patents Act (amended to honour product patents) – particularly after a couple of key judgements went against pharmaceutical multinationals – Novartis and Bayer (see infobox).

But as both countries play to their respective political and business constituencies, the coming month will unravel if the road ahead for Indo-US trade will continue to be rocky, or not.