Forget NAFTA. Here’s The Trade Issue To Watch
President Donald Trump makes no secret of his disdain for what he deems to be unfair trade deals. He’s pulled the United States out of the Trans-Pacific Partnership and seems to have his sights set on the North American Free Trade Agreement (NAFTA).
During his State of the Union address, President Trump declared: “The era of economic surrender is totally over. From now on, we expect trading relationships to be fair and, very importantly, reciprocal.” We need to look beyond the Trans-Pacific Partnership (TPP) and NAFTA to do that.
A bigger trade issue seems to be flying under the radar, and that is the imbalance of trade with India. That country is poised to surpass Britain to become the fifth largest economy in the world in 2018. That should mean India is a prime market for U.S. goods, however, we had a $21.7 billion trade deficit with the nation in 2017. India, moreover, has a stunningly bad record of respecting companies’ intellectual property rights.
Despite this, there has been little public discussion about how to balance trade with India. If the president is truly committed to an “America First” approach to global commerce, it’s time to step up efforts to push back against Indian initiatives that promote their national goods to the detriment of others.
“Make in India” masks protectionist policies
Just as some in the United States are embracing a protectionist economic doctrine, so too are some leaders in India where it’s been formalized as the “Make in India” initiative. The program was launched in 2014 to encourage business growth in 25 sectors. A 2.0 version was recently kicked off to provide renewed emphasis on ten sectors including auto, pharma and renewable energy.
While there is nothing wrong or unusual about encouraging companies to do business in one’s country, Make in India is disingenuous. The program touts a commitment to transparency and lower regulation while at the same time disregarding those things to tilt the field against foreign firms.
Take, for example, the pharmaceutical industry. India has instituted price controls on U.S. medical devices and has a history of denying patents on U.S. medications. And yet, our country has opened the doors to Indian generics, many of which may pose safety concerns.
There is also widespread concern that India lacks the ability or the inclination to police counterfeit goods within its borders or otherwise safeguard the intellectual rights of companies. All the while, businesses are lured into the country with the promise of the government acting as a partner for their interests.
How the United States can respond
In his inaugural address, the U.S. Ambassador to India, Kenneth Juster, noted that America First and Make in India aren’t necessarily incompatible. That may be true, but it will require diligence from U.S. officials to ensure our companies aren’t penalized or locked out of the Indian market.
Both Juster and the U.S. trade representative, Robert Lighthizer, should make it a priority to address barriers to trade between our countries. These include the sky-high tariffs India charges on goods ranging from flowers to motorcycles to textiles. Meanwhile, it falls to the Indian Minister of Commerce and Industry, Suresh Prabhu, to take steps to address the corruption and bureaucratic red tape that have historically plagued his country.
If India wants to truly embrace the ideals of the low-regulatory market purported by the Make in India initiative, it needs to overhaul how it treats foreign businesses. Custom duties of up to 24 percent for medical devices and tariffs as high as 150 percent for alcohol are not the way to promote trade between the United States and India. We have been welcoming to India’s goods, services, and workers. Now it’s time they extend the same courtesy to us.
Holding India to its word
The Indian trade deficit doesn’t get a lot of press – certainly not as much as the so-called “bad trade deals” of NAFTA and TPP. However, it’s just as important, and now is the right time for U.S. officials to give it the attention it deserves.
During his keynote address at the January World Economic Forum in Davos, Switzerland, Indian Prime Minister Narendra Modi railed against protectionist policies. However, he only has to look at his regulations at home to see protectionism at work.
It’s time for Modi to practice what he preaches, and it’s time for the United States to take the Indian trade problem more seriously.
Maryalene LaPonsie is a freelance writer based in Michigan who has spent the past decade reporting on education, business and finance.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.