U.S. Policymakers Can’t Ignore Storm Clouds from India

U.S. Policymakers Can’t Ignore Storm Clouds from India

06.07.13 | By Chip Davis

This week, the Commerce Department released the latest data on America’s trade balance, and the news was not good. While exports of U.S. goods and services rose in April, our trade deficit grew to $40.3 billion, up more than 8 percent in a single month.

But for American innovating sectors like semiconductors, biopharmaceuticals, and telecommunications that rely on exports to grow our economy and U.S. jobs, even more disturbing was our trade deficit with India, which increased by over 34 percent to more than $2.4 billion.

This news is hardly surprising, given that our trade deficit with India has more than quadrupled since 2009. For U.S. policymakers, it should serve as yet another of many red flags that have been raised by the Government of India’s (GOI) refusal to play by internationally accepted rules and allow foreign firms to compete fairly. Instead of working to develop strong innovating industries of its own in technology, life sciences, and energy, India has instead chosen a path of protectionist actions that effectively locks out foreign competition and ultimately hurts its own economy and citizens in the long run.

In the short term, however, this kind of behavior has direct consequences for the United States in terms of jobs and economic growth. Many of the industries being shut out of India’s market rely heavily on intellectual property (IP), and are the sectors of our economy that are showing the most promise for our economic future. IP-intensive jobs tend to pay higher wages (up to 30 percent higher than average); at the same time, however, the industries supporting these jobs depend on our ability to access foreign markets, especially large markets like India, for future growth.

In a sign that policymakers are beginning to understand the magnitude of the situation, several members of the Senate Finance Committee referenced India issues at the confirmation hearing for Michael Froman yesterday, President Obama’s choice to be the United States Trade Representative. That’s a good start, but must be followed up by action. That’s why PhRMA has joined with America’s leading innovators and drivers of our economy in a letter to President Obama that urges the Administration to stop this discrimination and mitigate the worsening damage to U.S. industry.

We look forward to working with Congress, President Obama, and the USTR to find solutions that will restore balance in our trading relationship with India and ensure American innovators can continue to provide the kinds of high-paying jobs that will help secure our country’s economic future.

 

 

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