U.S. concerned over barriers to India trade ties

Tuesday, 8 February 2011 00:01 - - {{hitsCtrl.values.hits}}

NEW DELHI (Reuters) - U.S. Commerce Secretary Gary Locke said on Monday he was concerned about India’s tariff and non-tariff barriers, highlighting the hurdles in boosting bilateral trade despite their growing economic and security ties.

Locke’s remarks came after a meeting with Indian Trade Minister Anand Sharma where the two sides reviewed progress on thorny issues such as market access and non-tariff barriers.

Despite India’s growing global weight, it is only the United States’ 14th biggest trading partner and obstacles, from outsourcing controversies to the Doha world trade round and market access, have put the brakes on faster integration.

“Even though India has made tremendous strides to open up its economy there is much more work that is left to be done,” Locke told reporters.

“While many tariffs have come down, others remain. Even when there are not outright tariffs there are non-tariff barriers that limit trade and investment.”

The stakes on trade are high as the United States and India need each other to meet ambitious export targets amid a sluggish U.S. economic recovery, yawning trade deficits with China and fears of global imbalances sparking a standoff.

As part of its efforts to boost trade with India, United States has said it would ease restrictions on exports of high-technology goods to India in recognition of stronger economic and national security ties.

On Monday, Sharma welcomed that move.

“ ... there will be full cooperation in space technology, nuclear technology and other high-end technologies between the U.S. and India,” Sharma told reporters.

A bilateral trade boom has seen total flows treble to $36.5 billion in goods in the decade to 2009-10, but the United States slipped from number one to three in India’s trade partners. India lags China, which is the United States’ third biggest trading partner.

The Obama administration wants to double its exports within five years to bolster domestic growth and create jobs.

But both sides have accused each other of policy foot-dragging, especially over the Doha trade talks. In India there is a sense that New Delhi is much keener to push for a deal than Washington.

The United States complains that India has not accepted the responsibility that comes with its growing economic strength in the world and insists on shielding many sectors.

In recent times temperatures have risen over a U.S. visa fee hike that is expected to hit India’s IT industry as well as proposed tax changes that would end breaks for U.S. firms that create jobs and profits overseas.

On Monday, however, Indian Trade Secretary Rahul Khullar said India will not go rushing to the World Trade Organisation (WTO) to settle the dispute over an increase in U.S. visa fees.