Resolution to Highlight Challenges and Opportunities in the US-India Trade Relationship
The United States and India are the world’s two largest democracies and are currently experiencing their largest bilateral trade and investment flows ever recorded, with total goods and services traded in 2011 recorded at $100 billion. However, India has recently begun implementing anti-competitive economic policies and recent policy, regulatory and legal decisions have demonstrated an alarming disregard for accepted international intellectual property rights. This is a troubling development for India and its trading partners. As Robert Atkinson of the Information Technology and Innovation Foundation (ITIF) puts it, by embracing this practice of innovation mercantilism, India “risks compromising the gains the Indian economy has made over the past two decades in addition to harming foreign firms and the global economy.” This resolution outlines some of India’s mercantilist practices underscoring their inconsistency with free market principles and international intellectual property norms. We will also highlight how India’s current protectionist trends threaten to stifle its own economy. Steps to be taken to discourage some of India’s troublesome practices are offered.
Whereas, the Indian economy is large and will comprise nearly 20 percent of global GDP by 2060 according to the Organization for Economic Cooperation and Development (OECD); and
Whereas, India is an important strategic partner so it is optimal to foster a similarly positive economic relationship; and
Whereas, Indian policymakers and courts have recently adopted protectionist policies that will harm numerous industrial sectors; and
Whereas, India’s Preferential Market Access (PMA) rules have the potential to require that up to 80 percent of all computers and electronics sold in India by 2020 be produced in India, making India a difficult export market for information and communications and technology (ICT) products; and
Whereas, the Indian government has adopted anti-competitive policies including forced localization requirements affecting industries including but not limited to renewable energy and medical devices; and
Whereas, the Indian Government imposes discriminatory taxes on foreign businesses, making them less competitive and triggering expensive litigation to resolve tax disputes; and
Whereas, recent Indian policy, regulations and legal decisions have demonstrated a consistent disregard for internationally-recognized intellectual property rights (IPR); and
Whereas, this disregard for IPR is in violation of India’s obligations as a member of the World Trade Organization (WTO); and
Whereas, numerous industry sectors have been adversely affected by the challenging IP climate in India including but not limited to biopharmaceuticals, entertainment, information technology and renewable energy; and
Whereas, because of the “limited progress on IPR protection and enforcement” made by India, it remains on the United States Trade Representative’s (USTR’s) Special 301 Priority Watch List for 2013; and
Whereas, because of IP concerns that range from India’s revocation of internationally recognized patents to its position as a major producer and conduit for counterfeit goods to its unacceptably high rates of piracy, India consistently ranks last in the US Chamber of Commerce’s Global Intellectual Property Center’s International IP Index Measuring Momentum behind Brazil, China and Russia in nearly every indicator in the study; and
Whereas, India’s reputation as a market leader among emerging economies risks encouraging the adoption of similar anti-competitive practices and lax enforcement of intellectual property rights throughout the developing world; and
Whereas, far from promoting economic growth, according to an analysis by the Organization for Economic Cooperation and Development (OECD), India’s mercantilist policies are slowing economic growth and foreign direct investment (FDI);
Therefore be it resolved, that the commonwealth/state of [INSERT STATE] urges the Indian government to implement measures that uphold internationally recognized IPR andencourage innovation, which will occasion a return to the path of developing a knowledge-based economy; and
Be it further resolved, that the commonwealth/state of [INSERT STATE] urges the Indian government to abandon its current protectionist policies and to adopt in their stead policies that adhere to free market principles; and
Be it further resolved, that the commonwealth/state of [INSERT STATE] urges the Administration and United States Trade Representative to defend free market principles and uphold global IP standards by utilizing the diplomatic tools available, including a review of India’s Generalized System of Preferences status and the filing of appropriate WTO complaints against India to encourage the government of India to strengthen its IP protections and to respect global IP standards; and
Be it further resolved, that upon adoption, an official copy of this Resolution be prepared and presented to the President of the United States, the US Trade Representative, the US Secretary of State, the Chairman and Ranking member of the U.S. Finance Committee’s Subcommittee on International Trade, Customs and Global Competitiveness and the Chairman and Ranking Member of the US House Ways and Means Subcommittee on Trade.
Approved by the ALEC Board of Directors on September 29, 2013.