WHEN the European Union gets on board, the United States cannot be far behind. India and the US are planning a limited bilateral trade agreement involving a handful of sectors like human resource development, energy, infrastructure and financial services to begin with.
A private sector advisory group (PSAG) formed by the two governments—comprising research institutes—will give its recommendations on possible sectoral openings. The report of the group, which was set up during the recent trade policy forum (TPF) meeting in Chicago, will be tabled when the USIndia TPF meets again this October.
Sources said the sectoral agreement would allow the two countries to open up their economies in phases and exclude agriculture—a sensitive issue in both countries—from the trade talks, which is mandatory for a free trade agreement (FTA) under US law.
The contentious agri sector also makes it difficult for the two sides to sign an FTA. Official sources admitted as much. They told ET that the two sides would have started talks on an FTA but for agriculture. However, “they were eager to intensify trade in goods and services and investments”.
“Both sides have decided that bilateral liberalisation of trade should happen in a phased manner. We should begin by identifying some sectors where work can start immediately. The PSAG will give its report on the sectoral openings possible when the CEO’s forum and the TPF meets again in October in New Delhi,” said a source. That means human resource development, higher education, financial services and infrastructure, including the energy sector, are among the first few areas that the PSAG would examine. Investment, intellectual property and cooperation between regulatory authorities too will be studied.
The PSAG has already recommended that the two countries should start talks on a mutually agreeable bilateral investment treaty by the year-end. Cooperation between regulatory agencies like the plant & quarantine departments will also be worked upon by the PSAG.
Also, the group will look at cooperating more in the protection of intellectual property, a key demand from the US pharma industry. This demand, however, could be difficult for India to accept as it has always attempted to protect its poor from steep jumps in prices of essential drugs. Incidentally, US exports to India increased by a sharp 75% in 2007 to $17.59 billion, shrinking the trade gap between the two countries. India’s exports to the US, on the other hand, rose by 10% to $24 billion during the year. US exports to India include aviation & aircraft, engineering goods & machinery (including electrical) and precious stones & metals.