By Ishita Misra
The US International Trade Commission (USITC) has released ‘The Year in Trade 2016’, an annual report that examines USs international trade. According to the report, India has risen from the tenth largest single-country trading partner in 2015 to the ninth largest in 2016 based on two-way merchandise trade. However, problems regarding Intellectual Property Rights (IPR) remains the most pressing bilateral trade issue between India and the US.
Breakdown of trade developments
The two-way merchandise trade between India and US grew by 2.2 percent in 2016 and amounted to $67.7 billion. Even though both imports from India, as well as exports to the country, grew, the imports grew more than the exports thus, resulting in the growth of the US merchandise trade deficit by 4.2 percent.
US merchandise exports to India increased to $21.7 billion in 2016. The leading exports were non-industrial diamonds, nonmonetary gold, almonds, petroleum coke, and civilian air crafts, engines and parts. Meanwhile, US merchandise imports from India totalled to $46 billion with medicaments, gold jewellery, light oils and frozen shrimp as the major imports.
With regards to the service sector, the total trade grew by 10.3 percent as India continues to be the seventh largest trading partner and the only top trading partner with which the US has a services trade deficit. However, the exports to India grew more than the imports leading to a 1.6 percent decline in the trade deficit.
Issues with IPR in India
The office of United States Trade Representative (USTR) annually prepares the Special 301 report which identifies countries that do not provide adequate intellectual property rights and fair market access to US entities relying on its protection. The report has classified India under the Priority Watch List in its 2017 edition.
Countries are classified under this list when their current IPR regulations are inadequate and require active monitoring from the USTR. India has been a part of the list since 1989 because of the concerns related to weak protection and enforcement of IPR. The key concerns are inadequate trade secret protection, online piracy, and domestic distribution and export of counterfeit pharmaceuticals.
Furthermore, it is of major concern that the Indian government took no meaningful or effective action against Indian markets that appeared in USTRs ‘Out- of- Cycle Review of Notorious Markets’. The report also states that the US encourages India to address the gaps in its IP protections, particularly regarding the computer related inventions and Section 3(d) of the Patent Act which does not grant patents on items that are not significantly different from their previous versions.
A fitting response?
In response to these concerns, in 2016 the Working Group on Intellectual Property under the Trade Policy Forum, held meetings in India focusing on strengthening IPR protection and enforcement. Workshops on copyright and trade secrets were also held in 2016. However, India has rejected the Special 301 report and termed it as a unilateral report of the US government.
It has almost been a year since the National IPR Policy was announced and the government continues to dismiss the changes suggested by the US and has refused to drop Section 3(d). Nirmala Sitharaman, Union Commerce and Industry Minister, stated that Indias IPR laws are compliant with the global IP agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and that there is no need to give explanations to other countries.
The Indian economy
Indias denial of having serious problems with its IPR regulations could have a negative impact on its economy in the future. The US is Indias top destination for exports. Even though the United States does not threaten action against countries on the Priority Watch List, according to the US laws, retaliatory measures might be taken if a country falls to the categorisation of a priority country.
According to the USITC report, India has substantially fewer links to the global economy compared to other developing countries like China. Therefore, a decrease in exports to the US will have serious repercussions for the Indian economy. The economic growth of India has already slowed down from 7.9 percent in 2015 to 6.8 per cent in 2016. If India does not strengthen its IPR regulations, it could face considerable slowdown of economic growth due to losses in exports to the US.
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