Washington: The US and India are to explore the possibility of forging a bilateral investment agreement in high-level talks next month, US treasury secretary Henry Paulson said.
He said the two powers still would push ahead for a successful conclusion of the Doha Round of multilateral trade negotiations under the World Trade Organization (WTO).
“Clearly, it would be positive if we could have a successful bilateral investment treaty,” Paulson told a meeting of the US-India Business Council (USIBC) here on Wednesday.
“We will be sitting down with our Indian counterparts some time in February to start the discussions,” the former top US investment banker said, cautioning that talks would not be easy.
“I would just say to you that this is a heavy lift, this won’t be an easy thing to get done. I think that the fact we are having the discussions right now is a very constructive thing because I think both sides recognize the importance of bilateral investment,” he said.
US officials have been prodding India to adopt sweeping reforms, including lifting ownership caps and reducing high tariff rates, to draw foreign investments and fuel rapid growth in the world’s second most populous nation.
American businessmen are also keen to participate in India’s plans to build $500 billion (Rs19.65 trillion) worth of infrastructure over the next five years, if reforms in such areas are adopted.
US trade representative Susan Schwab and India’s commerce minister Kamal Nath are to meet in Chicago next month to discuss the bilateral investment agreement, officials said. An agreement can help protect private investment, develop market-oriented policies in partner countries and promote US exports, according to the US trade representative office website.
It also encourages the adoption of market-oriented domestic policies that treat private investment in an “open, transparent, and non-discriminatory way.
The move to forge the pact is in line with an agreement reached between US President George W. Bush and Indian Prime Minister Manmohan Singh three years ago to build a strategic partnership between the world’s two biggest democracies, officials said.
A key component of the relationship was a landmark deal in which US agreed to transfer nuclear fuel and technology to India. The deal has still not taken off but US civilian nuclear companies eye $100 billion worth of spin-offs from it.
The USIBC has made it a top priority for 2008 to “actively advocate” for the implementation of an investment agreement, said Ron Summers, president of the council representing 275 of the biggest US companies investing in India. “The over-arching objective of such an agreement will be to significantly deepen US-India commercial ties—an objective wholly consistent with USIBC’s mandate,” he said.
Former deputy US trade representative Susan Esserman said an investment agreement was an “appropriate next step given the increased stature of our relationship, the incredible increase in investment on both sides.” “But this is in no way exclusive of a successful conclusion of the WTO Doha Round agreement.”