Five Questions With…
Linda Dempsey, Vice President, International Economic Affairs, National Association of Manufacturers (NAM)
Today’s Topic: Achieving Fair Trade with India
Linda Menghetti Dempsey is the vice president of international economic affairs at the National Association of Manufacturers (NAM). In this capacity, Ms. Dempsey leads the NAM’s efforts to improve the global competitiveness of manufacturers in the United States by advocating for intellectual property protection, increased export financing and the elimination of trade barriers, as well as pushing for agreements and treaties to open up new export markets to create jobs. Ms. Dempsey is noted for her experience on a wide range of international trade and investment policy issues.
As part of our continuing online series examining opportunities and barriers to free trade among global markets HUMAN EVENTS caught up with Ms. Dempsey on September 27th to talk about unfair trade practices in India.
HUMAN EVENTS: Three years ago, during remarks to the US-India Business Council and Entrepreneurship Summit in Mumbai, President Obama said:
“As we look to India today, the United States sees an opportunity to sell our exports in one of the fastest-growing markets in the world. For America, this is a jobs strategy. As we recover from this recession, we are determined to rebuild our economy on a new, stronger foundation for growth. And part of that foundation involves doing what America has always been known for: discovering and creating and building the products that are sold all over the world. That’s why I’ve set a goal of doubling America’s exports over the next five years – because for every $1 billion in exports, thousands of jobs are supported at home.”
We know the President is pretty good at filling in his March Madness brackets. How’s he doing on this prediction as it relates to US-India trade?
Linda Dempsey: I would say that if anything, the situation has deteriorated since the President made those remarks in November 2010. We’ve seen India adopt forced localization and other discriminatory policies in a number of sectors that seek to exclude our exports. The intellectual property environment in India has gone from bad to much worse. We’ve seen the Indian government revoke or deny compulsory license patents for over a dozen medicines and take other discriminatory actions against medical devices and agricultural products – a wide range of actions that we at the National Association of Manufacturers and many others in the business community care about.
A few months ago we joined with others to create the Alliance for Fair Trade with India to raise these concerns at the highest level of our government.
HE: Let’s talk about “forced localization”, a policy the Indian government is pursuing to protect certain domestic industries. What is it and how does it impede American manufacturing interests in India?
LD: India has told not just its government agencies to “buy local” – a practice that is followed by most countries including the United States to a much lesser degree as part of government procurement rules – but India has gone considerably further in telling private industry in India that they need to only buy Indian-made products – solar equipment is a notable example. The Indian government has gone back and forth in trying to impose the same rules on telecom producers in India, and other purchasers of information and communications technology. They seem to have pulled back from that proposal at the moment, but there’s a great deal of uncertainty about what will fill in the gap. And most recently they’ve told companies that are trying to develop power generation capacity – very large-scale energy projects in India – you need only buy Indian-made equipment. That really hurts exports from the United States.
It bears emphasis that India and the United States, along with many other countries, agreed to prohibit these highly discriminatory policies 65 years ago back in 1948, when the original GATT (General Agreement on Tariffs and Trade, a multilateral agreement regulating international trade) was created. This is a baseline rule that governments don’t put their thumbs on the scale and say, ‘You private companies can only purchase products made here’.
HE: There’s an intellectual property component to this issue as well involving revoking patents and denying copyrights and trademarks. How is this impacting innovation and foreign direct investment in India?
LD: This is one of the equally concerning policies we’re seeing. It’s an attack on basic intellectual property rights, which India, again, has agreed to protect and enforce in its international obligations. Put simply, they are ignoring and frankly taking our property and the innovation that has been created by producers not just here in the United States but by other countries as well, and ignoring those basic property rights that should protect them – be it in the patent area, where they’ve gone after medical and farm patents; in the copyright area, they’ve gone after a number of different types of copyrights; and other issues.
It’s striking because India’s own president has said that they really want this to be India’s decade of innovation. What we’ve seen here in the United States and around the world is that the companies that innovate need to have some security for the intellectual property they create. The United States is certainly one of the most innovative, if not the most innovative, countries around the world.
Lack of respect for basic intellectual property rules hurts exports, it hurts U.S. competition in third country markets, and it creates a risk for any company that cares about intellectual property. As you see the property of other industries taken you very much worry about yours, and that has direct implications on things like the perception of the business environment in India as well as foreign direct investment.
Over the last fiscal year in India, foreign direct investment has dropped 36%. That’s a huge decline. There are many reasons for this, but a big part of it are these discriminatory and unfair policies on intellectual property and forced localization.
HE: The National Association of Manufacturers and the U.S. Chamber of Commerce’s Global Intellectual Property Center launched The Alliance for Fair Trade with India in June. What progress has the Alliance made to-date in getting the Obama Administration to engage on this issue with the Singh government?
LD: NAM has partnered with the Chamber’s Global IP Center and fifteen other associations across a number of industry sectors to raise the profile of this issue. We’ve raised it directly with the Obama administration, and over 220 Member of Congress have also raised this with the administration over this past summer. When Secretary of State Kerry went to India and when Vice President Biden went to India, they both voiced concerns about discriminatory and unfair trade policies directly with their counterparts in the Indian government.
Most recently, fourteen governors wrote to the President asking him to raise this issue at his meeting with Prime Minister Singh on September 27th. We’re counting on President Obama to stand up for free trade, for open markets and for a level playing field with the second most populous country in the world and the largest democracy in the world.
HE: HumanEvents.com readers are grassroots conservative activists fundamentally supportive of free markets and fair trade. What can our readers do to support the Alliance in your efforts to level the playing field with India?
LD: We think as much communication to our own government about the need for trade policies to level the playing field, particularly in the face of what India’s doing, to make sure that our legislators and administration understand that this is an important issue across the United States.
One of the statistics I like to talk about because we at NAM care very much about open markets and want to expand the ability of our manufacturers to reach into foreign markets is this:
When you look at policies like free trade agreements where the United States has trade agreements with 20 countries around the world, those 20 countries represents only 6% of world population yet 90% of world GDP (gross domestic product). 50% of all our exports and manufactured goods went to just those 20 countries. And so there is a great power in negotiating agreements that level the playing field, eliminate tariffs and eliminate this whole wide range of unfair practices.
HE: Certainly a powerful argument for fair, open and transparent markets – let’s hope the Indian government is listening.
To learn more about this issue HumanEvents.com readers are encouraged to visit the Alliance for Fair Trade with India website at http://aftindia.org.