U.S.-India Commercial Dialogue to be launched

By Sushma Ramachandran

NEW DELHI, MARCH 22. India and the U.S. would hold annual ministerial-level talks to sort out trade and investment issues. According to official sources, the U.S.-India Commercial Dialogue set to be launched tomorrow would incorporate a provision for such regular consultations on a host of contentious issues including matters related to the World Trade Organisation (WTO).

Other aspects of the framework for the dialogue were being finalised today during talks between the Commerce Ministry and the U.S. Commerce Department.

The discussions which began yesterday with the U.S. Commerce Secretary, Mr. William Daley, today continued at the official level between the Commerce Secretary, Mr. P. P. Prabhu, and the visiting U.S. team including the Deputy U.S. Trade Representative, Ms. Susan Esserman. Among the multilateral trade matters being taken up by the U.S. side are the automobile policy and the export conditionality being imposed on multinationals setting manufacturing facilities in this country.

As far as tariffs are concerned, sources say the U.S. team expressed its concern over high levels, but were informed that these were being gradually reduced in line with WTO commitments.

On the soda ash problem worrying the U.S. Association of Soda Ash Producers, the Commerce Ministry informed the visiting team that individual companies were free to export to India but the association could do so as it was considered a cartel by the Monopolies and Restrictive Trade Practices Commission (MRTPC). In this context, sources say the talks revolved around market access as both sides faced specific problems in this area.

The issues focussed on by the U.S. delegation included several problems raised by American industry in the run-up to the U.S. President, Mr. Bill Clinton's visit under the auspices of the U.S.-India Business Council (USIBC). The U.S. corporates had urged the delegation to discuss specific problems relating to tax disputes, higher tariffs on soda ash, enforcement of intellectual property laws and telecom deregulation. The tax and excise questions would, however, have to be taken up with the Finance Ministry and were not raised with the Commerce Ministry.

Among the companies which took part in the USIBC dialogue were Sabre, Caterpillar, Cbay Systems, Panamsat, Procter and Gamble, Amway, General Electric, Apex Technology, Oracle, Sony Pictures and Vickery International. The U.S. Commerce Department assured the companies that their concerns would be taken up with the Indian authorities.

The question of the impact of U.S. sanctions on American companies in India was voiced during these consultations but a response was not forthcoming on this fundamental issue. Some companies pointed out that sanctions were a primary hurdle in promoting bilateral trade especially for sale to military entities. It was observed that many of the companies on the list of banned entities had no links with nuclear proliferation and this had curtailed trade with India. Besides about one billion dollars in road infrastructure investment is stalled due to sanctions.

Taxation disputes were highlighted since companies like Coke, Pepsi, Kodak, Sabre, Visa, Mastercard and American Express were facing such difficulties. These ranged from Kodak's efforts to export duty-free goods from a Nepal plant to taxation on e- commerce faced by companies like Sabre. Even GE is plagued with the same problem since companies with tax arrears cannot take planes leased by the firm. Delayed tax refunds are also worrying U.S. companies.

The implementation of IP laws is another area of concern. While companies like P&G concede that India has proper IP laws, they also face serious counterfeiting of their products.

Telecom deregulation was equally an area of worry especially for companies in the IT sector. They pointed out that high telecom costs meant that American companies are not viable in the Indian market in some sectors. This is compounded by the restriction on issuing HI-B visas by the US as these finish within the first quarter of every year.

Meanwhile, Mr. Daley and the Commerce and Industry Minister, Mr. Murasoli Maran, would address a conference here tomorrow on Indo- U.S. Trade and Investment under the aegis of the Confederation of Indian Industry (CII).

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