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US and India Trade and Investment

US and India Trade and Investment. ITRN 702 Jina Yu. Overview. Key US interests Mutual economic interests US desire for expanded engagement and cooperation

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US and India Trade and Investment

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  1. US and India Trade and Investment ITRN 702 Jina Yu

  2. Overview • Key US interests • Mutual economic interests • US desire for expanded engagement and cooperation • “The US and India are building a strategic partnership that is underpinned by our shared interests, our shared values as the worlds two largest democracies and close connections among our people” Barak Obama May 2010. • Committed to “establish[ing] a true strategic partnership with India, increase our military cooperation, trade and support democracies around the world” Fmr. Secretary Clinton.

  3. U.S. national interest, policy and politics. • Economic Interests • Huge market potential • Burgeoning middle class • Fighting trade barriers (quotas, subsidies, restrictions on FDI) • Security Interests • Strategic location in SE Asia, key focus in US foreign policy attention • Support for India having permanent seat on the UN Security Council

  4. FDI Deterrents • FDI Hurdles that must be addressed • Corruption and bureaucracy • Infrastructure: traffic, electricity, poverty • Royalties as a result of limited ownership stakes • Limited market penetration

  5. Policy Proposal • Renew Trade Promotional Authority (Fast track) • Authority expired in 2007 • Bilateral Investment Treaty • Encourage open transparency • Foster greater FDI flows • Movement towards a free trade agreement

  6. Conclusion • Pros • Negotiate to reduce tariff and non tariff barriers and lift restrictions on FDI. • US would gain greater access to India’s domestic market • Cons • Human rights violations • Inadequate IP rights protections, India 63% piracy rate • “Ultimately what America seeks is a level playing field for its companies, where to cost and quality of their products determines whether or not they win business. In seeking a level playing field we are merely asking for the same treatment foreign companies and investors receive in America.” US Embassy 2011

  7. Sources • Ahearn, Raymond. Rising Economic Powers and US Trade Policy. 3 December 2012. http://www.fas.org/sgp/crs/row/R42864.pdf • Economist. Foreign Companies in India: The Rewards of Royalty. 26 Jan 2013. http://www.economist.com/news/business/21570737-despite-what-you-might-hear-some-foreign-firms-india-are-prospering-rewards-royalty • Kornstadt, K. Alan. India: Domestic Issues, Strategic Dynamics, and US Relations. 1 Sept 2011. http://www.fas.org/sgp/crs/row/RL33529.pdf • Politi, James. US revises investment treaty approach. 20 April 2012 http://www.ft.com/cms/s/0/50a4f600-8b23-11e1-bc84-00144feab49a.html#axzz2MKCXLmXG • Singh, Hemant and Karl Inderfurth. Full embrace of India’s rise central to US foreign policy. 19 Feb 2013. Op Ed. http://articles.economictimes.indiatimes.com/2013-02-19/news/37179737_1_investment-treaty-bilateral-investment-india-reviews

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