Subcommittee Examines India’s Emerging Unfair Trade Practices

June 27, 2013

WASHINGTON, DC – The Subcommittee on Commerce, Manufacturing, and Trade, chaired by Rep. Lee Terry (R-NE), today held a hearing on “A Tangle of Trade Barriers: How India’s Industrial Policy is Hurting U.S. Companies.” The United States and India have a strong and growing trade relationship, with India ranking as the United States’ 13th largest trading partner in 2011. But this important trade partnership is being threatened by emerging discriminatory trade practices and other non-tariff barriers such as localization requirements and policies that violate internationally accepted intellectual property standards.

“Guided by their national manufacturing policy, India has begun engaging in a growing pattern of unfair and discriminatory trade practices which are directly harming U.S. companies in a wide variety of sectors—especially pharmaceuticals, energy technologies, and information and communications technology,” said Terry. “This committee is deeply concerned about the long-term effects these actions may have on U.S. companies and workers.”

Witnesses at today’s hearing highlighted how India’s recent actions are affecting U.S. companies, manufacturers, jobs, and the economy. Many policies, primarily those related to intellectual property, adopted by the government of India over the past two years have raised serious concerns about the future of the U.S.-India trade relationship.

“In 2010, the then-President of India declared the next 10 years to be India’s ‘Decade of Innovation,’” said Mark Elliot, Executive Vice President of Global Intellectual Property Center at the U.S. Chamber of Commerce. “Unfortunately, India’s policies are inconsistent with their former President’s statement. Over the last 18 months, particular policy, regulatory, and legal decisions have deteriorated their IP system, making India an outlier in the international community.”

Roy Waldron, Chief Intellectual Property Officer for Pfizer Inc., expressed that India’s unfair practices have undermined Pfizer’s “ability to innovate, create jobs and provide faster access to life-saving medicines.” He explained that India’s abuse of patents has had a negative effect on Pfizer’s ability to recoup research and development costs, often exceeding $1 billion. “Since early 2012, India’s policies and actions have undermined patent rights for at least nine innovative medicines. Many of these medicines have received patent protection in most countries across the world, suggesting that India is an outlier in recognizing and enforcing patent rights,” said Waldron. “This is not only creating significant uncertainty in the market but it also undermines our ability to compete fairly in India, and our willingness to invest there.”

Linda Menghetti Dempsey, National Association of Manufacturers Vice President of International Economic Affairs, explained, “Manufacturers in the United States have faced challenges in the Indian market – from very high tariffs and weak intellectual property protection and enforcement to complex and expensive regulatory processes. … Over the past year and a half, we have seen a damaging pattern of actions in India that are discriminating against U.S. exports of a wide array of goods. These actions have no other purpose but to favor India’s domestic corporations in strategic state-favored and state-advantaged sectors at the expense of manufacturing and jobs in the United States.” Recently, NAM, along with 16 other trade organizations, formed the Alliance for Fair Trade with India to press upon the importance to the Obama administration the need to address unfair trade practices with the government of India. “I’m deeply disturbed by the turn of events in India’s intellectual property system,” added full committee Ch

airman Fred Upton (R-MI). “IP-intensive industries contribute over $5 trillion to our economy and support a total of 40 million American jobs. These incursions on their intellectual property rights hurt their bottom line and thus their ability to contribute to our economy and job market – something we cannot take for granted, especially in this fragile economic time.”