tv [untitled] CSPAN June 30, 2009 5:00am-5:30am EDT
the government of india seeks such investment and has come a long way over the past decade to embrace private, public private partnership which can be taken advantage of by american companies coming to india. we are ready to partner with american defense companies, not only to create an american defense platform in india, but to contribute to the market for american goods abroad, taking american-made products and adapting them to the indian market. and taking indian made products and adapting them in america for the u.s. market. indian companies are already doing this. they are assembling tractors and plants in texas and georgia and india quay is being packed at a plant in florida for sale to the american it market. americans are singing indian owned luxury hotels here in the united states. we americans are drinking indian owned coffee and tea under
brands that have been known and respected in the united states for a hundred years. some of that coffee is being ground and back at a plant just a few miles from here at landover maryland. and americans are getting travel support from indian owned call centers located not in bangalore, not in chennai, in florida and ohio, right in the middle of appalachia. indian it specialist right here in the u.s. are developing ways of managing the bureaucracy of health care, at a much reduced cost something that american medical specialist are anxious to adapt into their systems. there are great opportunities in u.s.-india relations, many of them are really taking advantage of and many more waiting to be seized or it will take the free and open global community that president obama envisioned to make it happen. just a word very, very quickly on visa's. i think only because it is such a perennial issue between the united states and india.
the movement of people is an important part of an opening convert any of jacket announces that the h. one b. andy visa program would be a net plus for the u.s. economy. tom friedman this weekend in his column in "the new york times," if i can paraphrase it, if i remember correctly that every foreign graduate students who get a green card stapled to his or her degree. when he or she receives it here in the united states. now we use apparent number of h1b. in india, come to work virtually all of them go back to work for tata in india. i understand the importance of ensuring that there are no abuses of any decent program. but there must be a process by which india and american companies can serve as clients and freely travel between our two countries for legitimate business purposes.
thank you. >> thank you, david. arvind? >> thanks for the invitation. a great pleasure to be here again. and speaking on trade. let me just begin first by a bit of, a brief statement about india and then i will talk about u.s.-india. this is a rapidly growing economy now. the last six years has grown eight and a half%. if you calculate in real dollars, it is even higher. it has opened up quite dramatically from something like less than 15% of trade ratio in the early 1990s. the economy is now about 45, 47% so it's three times that. remember, we are talking about the trade ratio of the gdp itself has grown, then growing over that long period between six and 7%.
so it's very rapidly growing. very rapidly opening up. and on the investment side as well. you have got early 1990s for investment was completely closed so you had something like $200 billion of foreign investment in 1991. the fiscal year prior to that, about $62 billion came to india. due to the financial crisis, probably will slow down. but the investment by the indian firms rising very rapidly. again, the number that i have seen for the 2007, 2008 that are available the indian companies, mergers and so forth, income is worth about 30, $35 billion. so again very large investments. for the last year i've seen the
figures within the u.s., acquisition serving about $5 billion worth. i predict in about 15 years time, in terms of economic size and the market size. i'm going to talk a little bit about two or three of the issues, all of which have been touched upon but maybe i can provide a different perspective. the trade relationship, i think the key, other than the bilateral that are ongoing, the big when i see is doha, which seem to be a little bit pessimistic on this. my perspective being a little bit different then sue. on this, the last of these negotiations broke down, july of last year if i remember correctly, that the couple of sticking points, one had to do
with safeguard mechanism, for agriculture. and then there was an issue which the negotiations never got to but was working in the background had to do with the sector of deals on specific sectors. it seems to me that the special safeguard, and india also was taking a much hardline position at the time that nothing is really agreed, and that's what they said that everything else is great. so they also then had complaints about the u.s. concession and the subsidy, because the applied subsidies, and so there was scope left in terms of the offer that was on the table for the subsidies to be raised to the
power levels so they were seeking larger subsidy reductions from the u.s. as well. the compromise i see there is you can ask a compromise on the safeguard simply because the way it is currently written out, it is written as it is being demanded. it is in terms of some, important rise by certain, there is a legitimate argument that the initial imports are very, if they are themselves 2% of the global consumption. it's very easy for them to be doubled so 100% rising, and nevertheless be the penetration by the importers, very tiny even from 2%, growth of 4%. still not that big of a threat.
so it seems to me that, you know, on that safeguard some compromise can be reached on the indian side. on the sector, it seems that u.s. have to actually give a concession. this is a demand that has actually been made pretty much afterwards when you look at the framework agreement, the last one that was agreed to, the sector of the negotiations were meant to be at the option of u.s. insisting that no, no, no. , the last country has to make their concessions, compulsory. that's not the way it was at least initially agreed, but also from an economic standpoint it seems to me that not a great idea to actually go through these sector negotiations for political economy and efficiency reasons, efficiency reasons. when you have been in place, certain sectors are completely propped to zero. most economic efficiency, move
the resources into the wrong sectors actually, but more over particular economy wide what you are confronted with, you know, once you have all of them down to zero in certain sectors those sectors will simply drop from any future negotiations. and we have an agreement that we concluded earlier that the immediate post-agreements, and as a result, effectively kind of withdrew from the negotiation. so from their perspective as well. particularly again, you know, sharma are new preminger, it really seems if you wanted a change, because previous minister, was interested, and it seems that there is an interest on the inside to carry this
through. u.s. will need to move on this position if the deal is to be struck. it seems to me that it can be done. very briefly, david has spoken on it, but i just want to mention he did not mention the bill which has just been put out in the senate and it really tries to tighten in a big way that jesus in a way that's not really desirable and also the industry -- spoken and he said, very important provisions. again, it seems to me that once you have a cap on these pieces, but once you have capped those, too then further tightened up the road, micromanage, put in
rules, sort of micromanage how these pieces are used and so forth is a bit of an overkill of regulation and seems that it has served its purpose, it certainly is not in the indian upper. finally i want to say something about climate change and the issues that it opens up, there is already the waxman-markey bill which has been passed through the house. we wait and see what happens in the senate. and then there is also the issue of copenhagen, the national level you have got the markey bill would appropriate as the provision which actually requires the u.s. president to impose tariffs on the countries that do not have the cap and trade provisions all the kind that likes the markey bill actually puts in place. if not my own reading is that,
it most certainly is inconsistent. and it is going to be challenged if the u.s. -- the president himself has been advised, he certainly has good advisors out there so he issued a statement yesterday that he was not very pleased about this particular provision or so at least you know, he is on the right side of it but nevertheless there is a requirement in the bill that the president must do that. and if it does happen, it is almost certain to be challenged in the wto. and even, in the countries like china and india were to lose on that, you can be sure that there will be retaliation, you know, certainly in there for legal retaliation because, but china also threatened dumping and also. you can be sure that there is going to be retaliation on that. and so that is a major concern i
think. going down to copenhagen, there is a very strong pressure asserted on the outside european side inserted in the u.s. site about bringing in china and india to undertake actually commitments to reduce carbon. on this in china and on the same scale, indian emissions are very well below. it doesn't link them because of sheer size. they are about fourth on absolute levels. if you go by per capita levels in india is only 37. it really is way down there. and i just don't see, i mean, i would like india to take action but personally having looked, and i wrote a long paper on climate change and india three weeks, the last three weeks i have been working on. and in the end i just don't see how india can undertake such commitment at this stage. what you have is a country with 300 billion people who live in
i think my colleagues know a lot more about india than ideal. and if they were really talking about doha so i did three things in my eight to 10 minutes. one, i would like to pick up on some of the themes that susan and arvind panagariya talk about about the trade policy of the obama administration and tie that to something we haven't talked about and that is the united states india regionalism and end up with questions about india's ability to participate either the fda or the regional agreement. so let me start with the trade policy of the obama administration anti-finally to india, but not sort of specifically at the beginning. in an earlier session we had on trade policy here, i mentioned that a colleague of mine at the kennedy school first couple of months of the obama administration, i think this is true today, are still today described mr. obama or the obama
administration, the president as a passive free trader and his point was that the president was willing to intervene against the most egregious potential or actual island he upgrade protection or progression and trade, but not really to date at that time, and i think this is true today, willing to take leadership. yet on specific issues or either large questions, doha, or other questions about the existing trade agenda. i should have said at a footnote before i started, and that is it seems as if the obama administration, with all that's going on the economic crisis, with iran, he had been in office for years, but i must remind myself in you that it's only been five months to go anything i say about trade policy or other policies have to be tentative. they are just getting in place. so let me say that before going on. but for my short term, short time i have here, there are two
things i want to point out about what we know so far. one, it seems to me, and this is not just in trade but in other areas, but it's particularly dangerous and a concern, and trade in the president's style of leadership where there is a standard program or health care or climate change, is the president has tended to hang back not to intervene, not to attempt to guide legislation or to shape health care, or t-shaped climate change, or even in our case to shape trade policy yet. now, as i said, this is early and it's true the administration as all new administration to it has undertaken a major review of trade, or undertook a major review, which is supposedly finished now. but when you do that in trade, then you get the kinds of things it seems to me that we got in the stimulus package and divide america, whether it was the intervention, and my argument, my feeling would be that he
really, it was said that he intervene in a way that was meaningful but i don't think so. by america which is happily going on at the state and local levels. the same thing with the mexican trucking proposal that the congress vetoed. and more recently, the president made a great statement over the weekend about warning about the question of having kind of automatic what seems to be an automatic proposal for retaliation, some years down the road, but it was quite late. and that, in very well may be that in the bill just as the buy america was in the final bill. we don't know that yet. that brings me to, i should say there are three things. the second, and that is in general in trade, i think, the administration faces or president faces the situation, that congress has been increasingly restive under the balance, about the balance of
power and trade between the executive on the one hand and the congress on the other. a lot of this was muted, or at least deflected in discussions about partisanship in the bush administration. but in the obama administration i think you are still going at the same thing and it was the democrats versus republicans and now we have a total democratic administration as the president and executive and legislative, but it will continue. the congress and i think that climate change was a piece of this, really wants to take back power. and i think one of the things that president obama and his supervisors are going to have to deal with is where you push back. he came into office talking about the emperor presidency under bush, and there was some truth to that. they also at some point need to defend the prerogatives of the president. and i think that's going to be, that will play itself in trade. and finally on terms of the obama administration, again without making too much of it, the obama administration faces
something of a bush or the republican administration's bill face and i think the most acute form we have seen in recent years, or ever in the democratic party, he has a party that is deeply split on trade and globalization issues. i want to point out to you that last week 104 democrats in the house signed on to a bill that really called for a total revamp yet u.s. trade policy and stopping and going back and looking at fda's before going forward. now, i understand, you know, congressman can sign built and doesn't cost them anything but i think it is an importance of what the obama administration will face. in that regard let me shift from their to the regional questions, but before i do so, a place where it's going to come to trade policy and certainly will be to the floor in the administration when it besides do so, go forward with regional initiatives. and that is the pressure to
increase the u.s. demand in terms of labor and the environment. the most recent demand in the house are for countries to really, small countries at any rate, to accept an office of the ilo which will dictate to them their changes or revisions, particularly in their labor laws and the same thing would be true with environmental, environmental laws in terms of multinational treaties. i mention this because this has already come up in terms of india. and that is the indian government reacted very negatively to a much looser set of goals that the europeans put forward in terms of the european indian negotiations of the european indian fta. and i think that will be true of other countries. the europeans just wanted kind of general statements of social justice. the united states, because of the anti-ngos and the environmental movement, that we want things that are much more, or we are demanding things that
vision of east asian which is summoned by the east asian summit and plus 3. both india and the united states are, in a sense, outsiders. we are a part of apec, the indian government is a part of the east asian summit, but in the next couple of years it seems to me there's going to have to be decisions both within asia and also by the united states and india as to how we want to participate and in which institutions. some of you may know last year and he's still pushing it pretty hard kevin rudd, the then new premier of australia has been pushing an asia-pacific community which would combine economic security and political. that is not, he has not gotten very far with that, but i don't think he's going to give up, and it has caused others to say we may not agree with kevin rudd, but we need to go forward.
so i think both india and the united states are going to have to, as i say, make some decisions. the administration, for instance, there is on the table now the so-walled p-4 agreement -- so-called p-4 agreement which is a little dart that schwab sent their way by starting negotiations with the p-4 which is singapore, brunei, chile and new zealand which has already been taken as part of a sign of the obama administration interest in getting forward in some sort of regional approach. my only feeling from the united states' position and not speaking in any sense or knowing how the indian government would react to this would be that the united states should really move, i think, aggressively at least behind the scenes to reinvigorate apec, and as others have pointed out we've got to by chance, we've got a series of three meetings, the first
meeting in apec is chaired this year by singapore and then japan and then the united states in 2011. and i hope when the administration gets its act together and can face down house democrats that it will take advantage of that. the singaporeans are trying to get the obama administration interested. the japanese are interested in following through on theirs, and from a political point of view some advance before he goes into an election campaign would be something, it seems to me, something that should be attractive to the obama administration. one final set of points and that is -- and here these are more questions than anything else. which arvin and the others will know more than others. when you look over india's ability to move forward, and i realize arvin may have reservations about moving toward with -- forward with ftas in
general, but thus far i went to the government site, and they list about 14 sort of what could be fount r counted as ftas, but several of them are really superficial. there's some goods preferences between a couple of countries. the indian-asean fta which apparently they're going to sign i think goes to another level, but the key, though fairly complex and deeper fta though certainly not of the caliber that the united states has signed, the europeans have signed and others is the indian/e.u. fta which is moving forward, but it's had great difficulty. what i'm not clear about is the ability even know with all we've talked about with the elections, the new mandate, the congress party in control, the ability of that government to sign what would be called really deep
engagement as it were ftas going forward. that will impact not just the ftas they're talking about, but the ability of india to participate in whatever course merges for intra-- transpacific or intraeast asian community building. thank you very much. >> thank you, claude, and i wanted to thank you all very much for your presentations. before we move to questions from the awpped yens, i actually want to take the moderator's prerogative and follow up on an issue that you've all touched on with respect to india and its fta policy. india has been in negotiations with the european union as well as with korea, and given the slow process of the doha negotiations we've heard that, that u.s./india trade has increased greatly in the last ten years. and my question is with the sort
of still-forming trade policy positions of the obama administration combined with the potential new impetus in india for, perhaps, more work in doha as well as in fta policy what could we see happening in terms of perhaps a u.s./india fta? and with respect to the other regional arrangements, can the u.s. compete with the e.u. and korea without an fta in end cra? -- india? >> i think that it is interesting to look at the evolution of india's ftas as claude was outlining, and the rubber is really hitting the road in the negotiations, india's negotiations with the e.u. because interestingly in india they can