Last week, the U.S. Trade Representative announced it is taking action against India at the World Trade Organization to challenge India’s domestic content requirements that discriminate against U.S. exports by requiring solar power developers to use Indian-manufactured equipment instead of U.S. equipment.
Hopefully, the announcement signals the Obama administration is ready to take the steps necessary to address the full range of India’s policies designed to boost its domestic industries at the expense of businesses and workers in the United States.
The solar flap is merely the latest in a long string of anticompetitive actions by India. The U.S. market has long been open to Indian products, but goods manufactured by American workers face steep barriers entering one of the world’s most protected markets. U.S. exports to India face an average applied tariff more than six times higher than Indian goods pay in the United States. Innovative and creative industries also continue to face challenges with India’s deteriorating intellectual property (IP) environment.
Recently, the Indian government launched a series of initiatives that make this bad situation far worse. Over the last two years, India has become increasingly unfriendly to foreign suppliers, shutting manufacturers in vital industries like technology and healthcare out of its market in a misguided attempt to advantage its own domestic firms.
In addition to forcing the local production of solar energy and other goods, the Indian government refuses to pass anti-camcording legislation long sought by the film industry to combat piracy, provides no data protection for crop protection products, and has been denying and revoking patents for biopharmaceutical companies, unfairly empowering its own drug industry to manufacture and export medicines developed at great expense by U.S. companies.
In the Global Intellectual Property Center’s 2014 Index, which compares IP environments in 25 countries, India received the lowest scores, ranking behind the likes of Brazil, Russia, and well below China. Despite the declared competitive agenda to embrace a “Decade of Innovation,” India is poised to undermine all IP rights, stifling India’s investment, international trade, and own innovative potential.
These actions have far-reaching ramifications, threatening U.S. jobs and our ability to compete fairly in the global marketplace. Already, countries around the world are considering similar measures to promote domestic production at the expense of American industries.
Although Obama administration officials, including the president himself, Vice President Joe BidenJoe BidenUkraine's president compares UN to 'a retired superhero' Biden touts 'progress' during 'candid' meetings on .5T plan Biden to tap law professor who wants to 'end banking as we know it' as OCC chief: reports MORE, and Secretary of State John KerryJohn KerryOvernight Energy & Environment — Presented by the League of Conservation Voters — Senate Finance chair backs budget action on fossil fuel subsidies Kerry: 'We can't get where we need to go' in climate fight if China isn't joining in A new UN climate architecture is emerging focused on need for speed MORE have criticized India for its unfair trade practices and intellectual property violations, there’s been little willingness from New Delhi to address these growing concerns. It’s time to look at other options.
To that end, the U.S. International Trade Commission held two days of hearings last week into India’s unfair trade practices and how they disadvantage U.S. companies. But the United States can also take other concrete actions in the near term to send a signal that India must change its ways in order to be a respected, productive member of the global community.
First, the U.S. Trade Representative should designate India a Special 301 Priority Foreign Country, a spot reserved for the most egregious violators of intellectual property rights. This designation would serve as a wake-up call not only to India, but to other nations who are also violating international norms by blocking U.S. exports and infringing on intellectual property rights.
Second, Congress should consider updating trade preference programs that would bar countries that don’t play by the rules from receiving benefits. Those programs provide duty-free access to the U.S. market for certain products from India and other countries. India is the largest recipient of U.S. trade preferences, enjoying $4.5 billion in benefits in 2012 alone.
Businesses in the United States need a fair shake and a level playing field in overseas markets. Washington can help by using all available trade and diplomatic tools to address discrimination abroad. U.S. workers and the companies who employ them deserve no less.
Dempsey is the National Association of Manufacturers' vice president of international economic affairs. Elliot is executive vice president of the Global Intellectual Property Center at the U.S. Chamber of Commerce. NAM and GIPC serve as co-chairs of the Alliance for Fair Trade with India (AFTI).