India, US to ink trade pact on March 18

Indian Express | Mar 09, 2010

India, US to ink trade pact on March 18

Although multilateral negotiations promoting free trade have made little progress since the Doha talks fell apart in late 2008 — thanks in large part to differences between Indian and American trade policies — the two sides will sign a Memorandum of Understanding (MoU) in Washington DC on March 18 to guide bilateral relations. The MoU will serve as the backbone for promoting a comprehensive investment policy between the two sides, both seeking out protection for their foreign investors and domestic industries.

Framework for the MoU was agreed upon in October when US Ambassador Ron Kirk and trade minister Anand Sharma sat down for the first round of negotiations on a bilateral investment treaty (BIT). “It will help immensely in our negotiations for the BIT,” Sharma told The Indian Express. The agreement will establish sub-groups for opening dialogue on often contentious trade policy matters, such as high-tech trade and standards and barriers, said a high ranking official in the US Embassy under a condition of anonymity.

Earlier this year, Sharma and Gopal Krishna, joint secretary, department of industrial policy and promotion (DIPP), both confirmed that the signing of the MoU would occur this March.

The initial pact will likely result in a second round of negotiations for the BIT in Delhi during the following months, as both sides seek protection for their local manufacturers and goods and services from foreign investors. “The issues are market access... investor protections and dispute settlements,” he added. “We are looking to provide certainty and regularity; the US is India’s number 1 export destination for goods and services, but India is only our #17 exporter, there’s no reason India shouldn’t be in our top 10.”

Although firm dates for further dialogue remain undefined, it is possible that the BIT could be inked later this year, said the source. But while bilateral relations seem to be picking up between the free trade adversaries, the sides remain on opposite ends of the spectrum in terms of reaching an agreement on the multilateral negotiations, aimed at reducing trade barriers, according to negotiators traveling between New Delhi and Geneva since the first week of February when formal negotiations reconvened. “Right now, these negotiations are just a front,” said an Indian negotiator under a condition of anonymity. “Until the Americans are really at the table and ready to negotiate, we’re doing nothing more than giving an impression of progress.”

While the American-side has taken the brunt of the pounding for shortcomings on the Doha front during the last two-plus years, officials are confident that negotiations are progressing, despite the US Senate’s inability to appoint a World Trade Organization ambassador and the US’s rejection last week of an early ministerial stock taking in Geneva. “We’re starting to see outlines taking shape in terms of non-agriculture market access and on industrial goods and services to some degree; agriculture remains a very tough issue issue... we are quite eager,” said the American source. “But a stock taking alone is not enough; we don’t simply want to have a stock taking that moves the status quo. We need more.”

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source: Indian Express