U.S. Trade Representative places India on its Priority Watch List

The flags of the United States and India adorn a conference table during a meeting between Defense Secretary Jim Mattis and the Defense Minister of India Nirmala Sitharaman at the Pentagon in Washington, DC on December 3, 2018. (Getty Images)

Far from rescinding its denial of GSP (General System of Preferences) benefits to India, even as dozens of U.S. lawmakers urged the Trump administration to do so, the office of the U.S. Trade Representative (USTR) doubled down on its simmering trade rift with New Delhi and placed India on its Priority Watch List.

The Trump administration also has refused to extend its reprieve to India and several other countries that purchase oil from Iran — opening them up to punitive U.S. sanctions if they don’t cease these imports forthwith, which a former Commerce Department official Ray Vickery described it as a grave strategic error that could hurt the burgeoning U.S.-India strategic partnership.

At the end of April, the USTR, in its annual list of countries, which it believes is not playing fair and leveling the playing field in its bilateral trade ties with the U.S., lumped India on its Priority Watch List alleging lack of “sufficient measurable improvements” to its Intellectual Property (IP) framework “on long-standing and new challenges that have negatively affected American right holders over the past year.”

It said, “Over the past year, India took steps to address intellectual property challenges and promote IP protection and enforcement. However, many of the actions have not yet translated into concrete benefits for innovators and creators, and long-standing deficiencies persist.”

Consequently, the USTR said, “ India remains one of the world’s most challenging major economies with respect to protection and enforcement of IP.”

Besides India, the USTR also threw the book at China, Pakistan, Turkey, Indonesia, Russia, Saudi Arabia, Venezuela, among two dozen countries it placed on its Watch List and served notice that these “countries will be the subject of increased bilateral engagement with the USTR to address IP concerns.

The administration warned that if these countries failed to address Washington’s concerns,” the USTR would take appropriate actions, including enforcement actions “under Section 301 of the Trade Act or pursuant to World Trade Organization or other trade agreement dispute settlement procedures, necessary to combat unfair trade practices and to ensure that trading partners follow through with their international commitments.”

The USTR action comes in the wake of President Trump on March 4, informing the Congressional leadership in both the House and Senate that he intends to end preferential trade treatment for India, complaining that New Delhi has failed to provide Washington with “equitable and reasonable” access to its markets.

India has been the largest beneficiary of the GSP program, under which it’s allowed $5.6 billion worth of exports to enter the U.S. duty free. This is more than 10 percent of total Indian goods United States imported in 2017.

Trump’s elimination of GSP benefits to India is the first time since the advent of his administration that such punitive action has been taken against India.

The USTR, in its India section of the report, defending its placing of India on its ‘

Priority Watch List said that “the long-standing IP challenges facing U.S. businesses in India include those which make it difficult for innovators to receive and maintain patents in that country, particularly for pharmaceuticals, insufficient enforcement actions, copyright policies that do not properly incentivize the creation and commercialization of content, and an outdated and insufficient trade secrets legal framework.”

In laying it on with regard to India’s continuing trade indiscretions, the USTR said, New Delhi had also “missed an opportunity to establish an effective system for protecting against the unfair commercial use, as well as the unauthorized disclosure, of undisclosed test or other data generated to obtain marketing approval for certain agricultural chemical products.”

In a message to India and the other countries it had placed on hits trade hit list, the USTR said that “to maintain the integrity and predictability of IP systems, governments should use compulsory licenses only in extremely limited circumstances and after making every effort to obtain authorization from the patent owner on reasonable commercial terms and conditions.”

Meanwhile, as the Trump administration made clear that there would be no reprieve to countries like India that purchases oil from Iran and warned that U.S. sanctions would be imposed against these countries beginning May 3 if these imports were not halted forthwith, former Assistant Secretary of Commerce Ray Vickery, an expert on U.S.-India trade, said, “President Trump and Secretary (of State Mike) Pompeo are making a huge strategic error in announcing an abrupt cutoff date for importation of Iranian oil and failing to work with India on a more reasonable basis.”

He told India Abroad, “Evidently blinded by their hate for (President Barack) Obama and Iran, Trump and Pompeo fail to appreciate the wisdom of treating our strategic partner India as a trusted friend rather than a recalcitrant impediment.”

“Announcing an abrupt cutoff is no way to treat a friend much less a nation upon whom the U.S. is relying as the lynch pin of its Indo-Pacific Strategy,” Vickery argued, and added, “Instead of  encouraging India to make common cause in regard to China, Trump and Pompeo are now putting India and China in the same boat in regard to cutoffs of Iranian oil.”

He said that “moving India and China toward common concerns is the last thing the U.S. should do if it is serious about an Indo-Pacific Strategy.”

Vickery reiterated that “telling India it must abruptly cut off oil trade with Iran because of Iran’s promotion of terrorism will seem hypocritical to many Indians,” and pointed out, “The U.S. continues to trade with Pakistan and support it in other ways.”

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