Alleging protectionist policies by countries like India, eminent industry associations from developed world have said the trade ministers of G20 countries should avoid adopting such measures.

They said these policies have already begun to proliferate rapidly across other developing nations and are threatening the very foundation of a successful global trade market,

“Members of the G20 must lead by example as they jointly represent about two-thirds of the world’s population, 85 per cent of global gross domestic product and over 75 per cent of global trade.

The world’s largest advanced and emerging economies must also resist measures that isolate their own markets through forced localisation policies and actively work to encourage other governments to do likewise,” nearly 40 trade bodies from the developed world said in a joint statement addressed to the G-20 Trade ministers.

Trade ministers of G-20 countries, including that of India, are meeting in Australia over the weekend.

Forced localisation in India

In a blog, America’s National Association of Manufacturers said forced localisation is extremely detrimental to trade and creates unfair disparities since the countries which implement the policy often maintain open access to customers in the United States and many countries in Europe, Asia, South America and beyond.

“In India for example, policies have been put in place which block US manufacturers.

“These include retail investment caps which require stores to purchase from Indian producers and domestic manufacturing requirements for solar materials which mandate certain materials be manufactured within the country’s borders,” alleged NAM.

NAM is an organisation which has been leading the campaign against India in the past one year.

“Not only do these types of policies threaten US jobs, but they also restrict Indian business and consumers’ access to the next generation of innovative technologies.

“Manufacturers have remained diligent in our call for a dialogue with India to discuss the best path forward to address these concerns and develop solutions that will support India’s economy and job growth.

“However, until the recent election of India’s new Prime Minister Narendra Modi, these calls have largely gone unanswered,” NAM wrote.

“.... The protectionist policies adopted by India have already begun to proliferate rapidly across other developing nations and are threatening the very foundation of a successful global trade market.

“Now more than ever, it is crucial that these concerns be shared on a global stage not only to protect US manufacturers and the jobs they create, but to also ensure the integrity of global trade for the future,” NAM said.

Upcoming G20 meetings

“To that end, in anticipation of the upcoming G-20 trade ministers meeting in Sydney, on July 19, NAM as well as industry associations from around the world representing a multitude of sectors sent a letter.

“They urged the ministers to address the growing challenge of forced localisation that is creating barriers to global trade among many of the G-20 partners.

“The rise of forced localisation policies, notably in important sectors such as manufacturing, services and information and communication technologies (ICT), marks a troubling shift in global trade and economic policies,” the letter said.

“Many governments are beginning to abandon established trade policies that have led to decades of economic growth and the improvement in the quality of life, liberalisation, openness, and economic integration in favour of discriminatory market access barriers.

“Forced localisation policies have emerged in both emerging and developed economies around the world and are proliferating rapidly,” the NAM letter said.

The upcoming meetings in Sydney provide an opportunity for the G20 Trade Ministers to elevate forced localisation related issues as a global economic priority.

They can work with international institutions such as the G8, G20, APEC, OECD, and the WTO to recognise and acknowledge forced localisation policies as critical barriers to global economic growth and to strongly support new trade disciplines (such as within bilateral, plurilateral and multilateral forums) to counter such policies, the letter said.