US counts on all partners for fair and balanced trade
Let me turn to a second pillar in building out our strategic partnership — our economic and commercial relationship. India is in the midst of an economic surge as it integrates more fully into the global economy. In turn, the US trade and investment relationship with India continues to grow. Bilateral trade has gone from approximately 20 billion dollars in 2001 to 115 billion dollars in 2016. Of course, given the size of our respective markets, there is still plenty of room to expand the flow of goods and services in both directions and, in the process, for trade to become more reciprocal.
The United States counts on all of our partners to work with us to ensure fair and balanced trade. We are concerned about persistent trade deficits, including the one we have with India. We welcome steps by India to continue its reform agenda, expand market access, and further enhance the protection of intellectual property. And we want to work with India to expeditiously resolve trade and investment disputes. In our view, fully free and fair trade will support and accelerate Prime Minister Modi’s effort to improve India’s long-term growth rate in a sustained way. In this regard, the Prime Minister’s determination to move India further up on the World Bank’s Ease of Doing Business index is inspiring.
“America First” and “Make in India” are not incompatible. Rather, investing in each other’s markets will be mutually beneficial — it will increase our economic interactions and volume of trade, lead to collaboration on emerging technologies, and create jobs in both countries. But let me go further and suggest that it is time to put a strategic lens on our economic relationship — just as we have done with our defense relationship. A number of US companies have reported increasing difficulties conducting business in the largest market in the region — China. Accordingly, some companies are downgrading their operations there, while others are looking with great interest at alternative markets.
India can seize the strategic opportunity — through trade and investment — to become an alternative hub for US business in the Indo-Pacific region. Accelerating the economic and regulatory reform process already begun by Prime Minister Modi will help ensure that India is seen as an increasingly efficient, transparent, and well-regulated market. This will further promote growth and development. Continued reforms and trade liberalisation will also enable Indian products to more readily become part of the global supply chain, thereby accelerating job creation. There are many benefits to growing our bilateral economic relationship and making India a regional hub for US business. We saw on display at the recent Global Entrepreneurship Summit in Hyderabad the critical and positive impact that an enabling environment for innovation has on a nation’s economy. America is a leader in entrepreneurship and innovation, and already has extensive linkages with India in the technology sector. Opening India’s market further to US trade and investment will spur our collaboration on many emerging technologies that will drive and protect our economies, including those related to advanced manufacturing and cyber security.
Greater US trade and investment, combined with a strong environment protecting intellectual property, will lead to increased flows of capital and further sharing of intellectual know-how. Technological transformation needs a constant upgrade, which occurs when countries are involved in unimpeded international economic and data flows.
Increased openness to US goods and services, and an expanded presence of US companies, will also stimulate private sector investment in improved infrastructure and overall connectivity. As an example, US companies have innovative technologies that could support India’s ambitious goal to create 100 smart cities across the country. In addition, a US-India joint venture is already producing locomotives that meet global emissions standards to modernise India’s railways. And civil aviation is another important area where an enhanced partnership will help advance both of our economies.
Increased heft in our economic relationship would necessarily provide a broader and deeper, long-term US commitment to India and the Indo-Pacific region. This would complement our growing defense and counter-terrorism partnership, and moderate any policy differences that might arise along the way.
A final point with regard to this pillar is that a strategic view of our economic relationship could eventually lead to a roadmap for a USIndia Free Trade Agreement. To be sure, we are a long way right now from that aspiration, and there are many intermediate steps to be taken. But we should find creative ways to use our Trade Policy Forum and our Commercial Dialogue to enhance understanding, build confidence, and solve problems. As with our experience with high technology exports and the Next Steps in Strategic Partnership, a vision of where we want to go could help spur the resolution of many of today’s trade and investment disputes and signal to international companies that India is fully open for business. A third pillar ripe for enhanced strategic cooperation is energy and the environment. With the projected growth of India’s economy, the increasing size of its population, the rise of its middle class, and the urbanisation of its landscape, India’s energy needs for sustainable and inclusive development are going to be substantial for many years to come.
The US is uniquely positioned to offer India a comprehensive energy partnership. This includes all forms of energy — coal; crude oil; natural gas; and nuclear power; as well as technology related to clean fossil fuels, smart grids, energy storage, and renewable resources. Indeed, last year the US exported its first major shipment of crude oil to India. The US can also help provide the supporting services, infrastructure, and technology that are necessary for India’s efforts to further develop domestic sources of energy and enhance energy security.
The US-India Strategic Energy Partnership will convene early this year at the Ministerial level, and we look forward to welcoming Energy Secretary Perry to New Delhi. One highlight is our joint work on power and energy efficiency. As India strives to bring stability to its expanding power grid, US companies offer the technology and expertise to meet the demands on overloaded transmission and distribution systems. Our environmental collaboration extends to the oceans and maritime areas, consistent with Prime Minister Modi’s commitment to the blue economy. Indeed, these efforts could be expanded on a regional basis in order to protect the broader marine environment.