During Narendra Modi’s first visit to the U.S. as prime minister, both governments propose to focus on economic issues. Modi as well as American leaders have also emphasised the value of a strategic alliance and invoked their countries’ shared democratic cultures. But these commonalities are not adequate to enable Modi and Barack Obama to transform the stagnating India-U.S. bilateral into “the most important relationship of the 21st century.”
To reach that milestone will require new approaches to emerging global trends in trade and economic affairs, including on issues that India and the U.S. have traditionally bickered over.
For example, cooperation on technology in the IT and biomedical sectors—the sinews of India-U.S. relations—is increasingly constrained by the U.S. government’s overly restrictive intellectual property rights requirements, which are a result of pressure from a handful of multinationals. If these restrictions continue, the U.S. could lose projects related to upgrading the railways, e-governance and smart cities—all part of Modi’s economic vision.
Transforming the bilateral relationship entails recognition that these new technologies, which are changing the world, are the most promising fit for the different but complementary talents and human resources of the two countries.
But the existing pattern of intractable positions is illustrated by the problems of finalising a power sector agreement with the U.S. The agreement, which focuses on knowledge-sharing and exchanges in clean energy, has been held up because of the U.S.’s singular insistence on linking it to India’s phasing out of certain refrigerant gases that are the subject of multilateral negotiations.
Actually, Washington is rendering the entire multilateral global trading system itself irrelevant by pursuing two major trade agreements outside the framework of the World Trade Organisation (WTO) framework—the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership—which will encompass much of the world, excluding India, China, African countries, and a few developing Latin American countries.
At the same time, the U.S. continues to seek to derive advantages from the Trade Facilitation Agreement under WTO, ignoring India’s real concerns regarding food security. Unsurprisingly, this heightens India’s reservations on foreign direct investment in retail, especially by giants like Wal-Mart.
Cooperation on nuclear energy has also been held up. The civil nuclear energy agreement of 2008 took bilateral relations to a higher level. But the nuclear liability legislation passed by the Indian Parliament in 2010 is not aligned with current global practice. The Modi government is unlikely to change the law anytime soon. It is therefore necessary for the two governments to work out ways in which American corporations can participate in India’s growing nuclear energy industry.
If the U.S. government accepts that the current global practice of exempting multinationals that supply nuclear energy equipment of any liability in the event of an accident is unique when compared to other industries such as oil exploration, automobiles or construction, a way can be found to fine-tune the Indian legislation.
An example from the world of pharmaceuticals highlights the way that new global rules can be framed with adequate space for creative deviations that address different levels of development and prosperity in the two countries: pharmaceuticals major Gilead Sciences signed a licensing deal with Indian generic drug manufacturers on September 15 to sell an affordable version of Sovaldi, its $1000-a-day Hepatitis C drug. Besides bringing vital medical treatment to developing countries, the arrangement—the Indian companies will pay Gilead 7% of their revenues as royalty in exchange for full technology transfer—is a creative template that can enable a India-U.S. technology partnership to flourish.
If India and the U.S. discard their prevailing patterns of discourse, Modi’s visit can start a new process with global reverberations. Otherwise, the two countries must settle for a definition of success that will consist of possible deals to import liquefied natural gas, and extend the Defence Technology and Trade Initiative programme to eventually co-develop and co-produce military equipment. These are important but not game-changing.
With a decisive majority in Parliament and his well-received initiatives towards South Asian neighbours, Japan, and China, Modi is in a stronger position than Obama, whose approval rating has dropped to 40%, and whose vision of an America that has withdrawn from exhausting wars in the Islamic world is now shattered. Modi can draw on this advantage during his visit to the U.S.
Neelam Deo has been the Indian Ambassador to Denmark and Ivory Coast with concurrent accreditation to several West African countries. Her last assignment was as Consul General in New York. Her most challenging mission was liaising with the U.S. congress on strategic issues in Washington DC.
This feature was first published in the Live Mint.
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