U.S.-India Bilateral Cooperation on Trade and Investment: Impact of Joint “Framework” upon Global Services Industries
Posted March 19, 2010 by Bierce & Kenerson, P.C. · 
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On March 17, 2010, the U.S. and India signed a “Framework for Cooperation on Trade and Investment” to strengthen bilateral economic cooperation. The three-page agreement is short on details and relies upon inter-ministerial meetings and “Focus Groups” to identify and overcome impediments to bilateral l trade and investment. Five Focus Groups cover agriculture, innovation and creativity, investment, service industries and tariff and non-tariff barriers to bilateral trade in goods. The Framework agreement responds to a number of complaints by American businesses about the Indian legal framework governing intellectual property protections.
Overview. As a framework, the agreement establishes a relationship governance model with senior-level sponsorship with annual meetings of a “Trade Policy Forum” of the U.S. Trade Representative and the Indian Minster of Commerce and Industry. The U.S. Deputy Trade Representative and the Indian Secretary of Commerce will chair semi-annual meetings of five working “Focus Groups.” The “work plan” is intended to “strive to overcome” impediments to bilateral trade and investment.
Not a Trade Agreement. This Framework agreement does not establish any new rights or obligations between the countries. This is in stark contrast to the bilateral and regional “free trade agreement” approach adopted by the administrations of George W. Bush and Bill Clinton. Instead, the Framework is only a forum for dialogue on identifying and resolving specific conflicts and impediments to trade and investment.
Other Cooperation. This Framework agreement represents the culmination of work by the Obama administration to connect the world’s largest economy to one of the world’s fastest growing economies.
o In November 2009, India and the U.S. held a US-India CEO Forum to enable industry leaders and governments to explore opportunities for public-private partnerships (PPP’s) to stimulate innovation, job creation and “sustainable inclusive growth.”
o In August 2009, the two countries launched negotiations for a Bilateral Investment Treaty for investor protection. The US already has over 20 such BIT’s with other countries.
o In late 2009, the US and India signed a bilateral Memorandum of Understanding renewing bilateral cooperation in the field of intellectual property rights (IPR) to promote public awareness of IPR and focus on human resource development. The parties also signed a Traditional Knowledge Digital Knowledge Library Access Agreement to enable U.S. patent searches to identify Indian traditional knowledge in order to avoid improper patenting.
Impact on Global Services. The agreement sets forth a working arrangement for addressing specific issues affecting bilateral trade in services, including:
o Improved intellectual property rights and enforcement;
o Fostering innovation and creativity through intellectual property and other rights;
o Increasing collaboration between U.S. and Indian “innovators”:
o Promoting cooperation in areas that enable services trade in key sectors such as information and communications technology (ICT), education, environment and energy services and healthcare;
o Providing a climate of transparency and predictability in bilateral investment, including projects to support India’s infrastructure goals.
A significant element is the growth of bilateral trade and investment for small businesses in the global supply chain. The U.S. will be sending trade missions to India to promote the sale of goods and services in solar energy, medical and healthcare.
Today, entrepreneurial ventures from India have learned how to target American enterprises in all sectors of outsourcing. The Framework targets promotion of American service exports to India by U.S. small and mid-sized businesses, which can be effective in obtaining access to Indian labor and – to be seen—Indian customers.
Ultimately, the Framework agreement will provide a venue for dialogue to mitigate protectionism and mutual understandings on “sustainable inclusive growth,” the new socially-responsible banner for globalization under the Obama administration. Further, this Framework and other dialogues could serve as a new model for bilateral relations supporting global services, investment and trade for other countries providing outsourced services to U.S. customers.
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Filed under: Newsletter Article
Tagged: bilateral cooperation, framework agreement, trade and investment