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US, India consider negotiating investment pact

Philippine Daily Inquirer, Manila

US, India consider negotiating investment pact

23 February 2008

WASHINGTON—Reuters. The United States and India are discussing whether to negotiate a bilateral investment agreement as part of ongoing efforts to expand and deepen economic ties, a US official said on Friday.

Gretchen Hamel, a spokeswoman for the US Trade Representative’s office said there was "definitive interest" on both sides in negotiating an investment pact.

But for now, the two countries have decided to hold another round of exploratory talks before moving ahead, she said.

US Trade Representative Susan Schwab and India Commerce and Industry Minister Kamal Nath discussed various ideas for expanding economic ties at the fifth ministerial-level meeting of the US-India Trade Policy Forum this week in Chicago, Schwab’s office said in prepared statement.

Those included a recommendation from a private sector advisory group that the two countries negotiate a bilateral investment treaty by the end of 2008, while pursuing other longer-term initiatives to "achieve the freest possible environment for trade, investment and technology transfer."

Although most sectors of the Indian economy are at least partially open to foreign investment, many restrictions remain in politically sensitive sectors such as agriculture, retail trading, railways and real estate.

US foreign direct investment in India totaled about $8.5 billion in 2005 and was concentrated largely in the information, manufacturing and banking sectors.

A bilateral investment treaty would establish terms and conditions governing investment flows.

Two-way trade between the United States and India has grown rapidly in recent years and totaled $41.5 billion in 2007, compared to $15.9 billion in 2002.

Both Schwab and Nath said the Trade Policy Forum was a useful tool for expanding bilateral ties.

"The Trade Policy Forum has advanced discussions on a potential bilateral investment treaty and facilitated agreements to provide market access for items of interest to both sides," Schwab said in a statement.

The market access pacts cover Indian regulations on motorcycle imports, waxes on US fruit exported to India, entry of Indian mangoes to the US market and US almonds in the Indian market, Hamel said.

The two sides also agreed on licenses for opening an Indian bank branch in the United States, she said.