Face-Off To Trade-Off?

AMERICA Inc is looking up to President Bill Clinton’s visit to thaw the chill in Indo-US trade relations in the aftermath of Pokhran-II. Nearly two years after the Buddha smiled again, American businesses are coming to realise that sanctions have actually hurt their interests while filling the coffers of their European rivals who have stepped in to service India’s military needs. The pressure of these affected conglomerates on the US government could lead to further easing of sanctions. "This is quite an opportunity to bring things to a higher plane," says US-India Business Council executive director Michael T. Clark, who has been in touch with the White House in drawing up the trade agenda for the presidential visit.

Despite acute political differences, particularly over non-proliferation and Kashmir, trade is one area where the interests merge.

According to Clark, more than 50 senior corporate executives, including former US ambassador to India Frank Wisner - who now represents the American International Group Inc (aig) - will be accompanying Clinton. Other big names expected are Lou Gestner of ibm, Arun Netraveli of Lucent Technologies, Jack Smith of General Motors, Kenneth Lay of Enron and Jack Welch of General Electric (GE). Senior representatives of Boeing, Caterpillar, Xerox, Chubb Corp, aig, Chem Tech, ibm, SunMicrosystems, Reed & Preist, Stone & Webster and Morgan Stanley are also likely to tour India. "We’d like to use the presidential trip to focus on market access for US companies," says Clark. Many Indian-American businessmen eager to join the president on his visit have approached local Congressmen to put in a word with the White House.

According to Ravi Wig, president of the Indo-American Chamber of Commerce, the time has now come for the two sides to conduct their business affairs like "adults" where each understands the other’s problems. Lamenting the slow judicial process in India which led to angry pullouts by companies like Cogentrix, Wig supports the idea of a separate legal panel "working within the framework of the Indian legal system" to speedily deal with cases involving foreign trade. Wig also feels that MoUs likely to be signed during the Clinton visit are "more of a show-off... What happens after that is more important". Says he: "Why should we let our business interests with the Americans be affected because of problems with Pakistan?" On its part, the US-India Business Council plans a round-table of US and Indian business leaders in the presence of President Clinton and Prime Minister Vajpayee, probably in Hyderabad.

The two countries already have ongoing working groups in certain thrust areas, including power, infotech, telecom, intellectual property rights, chemicals and broadcasting and entertainment. Among other issues the US would like to raise is a reduction in tariffs on some items. US trade representative Charlene Barshefsky recently wrote to the Indian government on this.

Other specific issues concern companies like Kodak, which can’t avail of duty-free exports to India from its Nepal plant, the Coke-Pepsi tax dispute and proper taxation on e-commerce. GE, the largest leaser of aircraft in the world, also has a specific problem. Currently, if the company to which it leases a plane is ruled to be running up tax arrears, the Indian tax authorities are empowered to impound the aircraft even though GE still owns it. No wonder the company wants the issue sorted out.

But India’s unsure position was best summed up by Richard Haass, director of policy studies at Brookings Institution: "India has to decide how it wants to be perceived. It can’t on Mondays, Wednesdays and Fridays be throwing rocks at the US and then on Tuesdays, Thursdays and Saturdays demand to be taken seriously as a major world power. It can’t have the best of both worlds."