After the euphoria,the reality check

“We have the most open market in the world, and right through the Asian crisis, we kept absorbing huge amounts of world trade, and that’s why our deficit is so high today. We have no Quantitative Restrictions (like India has), no minimum import prices (India still has some such items). We just have trade laws which are compatible with the WTO (the WTO recently ruled that Special and Super 301 were WTO-compliant).’

Clinton’s real contribution, a senior Indian Ministry of Commerce official was quick to point out, is different. It’s in the potential dialogue between the two countries, using this to resolve the outstanding trade and investment issues. US Commerce Secretary William Daley declared that India and the US will hold three cabinet level dialogues focusing on finance and investment, cooperation on trade and investment and in the field of commerce.

The dialogue on finance and investment will be led by US Secretary of Treasury and Indian finance minister. The one on trade and investment policy will be led by the US Trade Representative and the Indian Prime Minister’s Office. The commercial dialogue between the two countries is intended to act as a forum to facilitate trade and maximise investment opportunities across a broad range of economic sectors including information technology, infrastructure, bio-technology and services. It will take place through government to government meetings to be led by the Indian Commerce Minister and the US Commerce Secretary or their representatives and followed by joint government-private sector meetings. Within 90 days, a detailed plan would be drafted. `While Ron Brown’s visit saw the setting up of a US India Commercial Alliance’, the commerce ministry official pointed out, `this didn’t really add up to much. This time around, there’s a definite framework and a time-table in which issues are to be resolved within 90days, for instance, the issues have to be spelt out.’

Clearly, the success of these joint working groups can be assessed only in the future. But what makes it likely that they will help considerably, is that both India and the US have managed to resolve some outstanding differences quite amicably over the past few months. Ambassador Esserman’s visit to India last November, and the series of talks that the two sides held since, resulted in a very major agreement on what is called Article 28 of the WTO. This allowed India to raise import duties on several agricultural items of interest to it (wheat, sugar, rice, millets), while reducing import duties on several items of interest to the US (such as almonds and fresh fruit).

Another outstanding and very public irritant that the Indian side has, for instance, deals with H1-B visas for Indian professionals who wish to go to the US for work. Currently, the US has a cap of 115,000 on the total number of software professionals that can enter it annually from all over the world, and this is slated to come down to 65,000 by 2002. Negotiations and hectic lobbying between the two countries, Dewang Mehta of Nasscom announced with great glee during Clinton’s visit, has resulted in a bill being introduced in the US Senate increasing the global cap to 1,95,000, and freezing this at this level for the next three years. Both Nasscom and CII made a presentation to Clinton during his Hyderabad leg, asking him to consider this sympathetically, when the Senate and Congress finally okay it.

And just as Mehta’s confident that the visa issue will be sorted out soon, Indian officials are pretty certain that the talk between Commerce Ministers Murasoli Maran and Daley during Clinton’s visit would resolve the GSP benefits problem. Last June, since India had not fulfilled its obligations on the intellectual property rights issue, the US had withdrawn GSP benefits which gave Indian agro and pharmaceutical products special access to the US market. By June this year, the GSP benefits are expected to be back in place.

It would, of course, be naive to think that the Clinton visit will spell an end to more ticklish issues, such as the US desire to have another trade round, to somehow link labour standards with trade issues, and to force India to open up its markets faster. Most of these, in fact, will keep snowballing the way they invariably do, with both India and the US still quite suspicious of one another, despite the convergence of interests in the `knowledge’ industry.

This is where Clinton’s dialogue promises to change things. The hostility around the Seattle meet, for instance, had seen both sides almost shut down all negotiations. Now, post Clinton, as Rahul Bajaj told Esserman, both sides will try not to get bogged down in the old complaints, `since we’re all friends now.’