Policy

‘H-1B is an important but small issue in India-US trade’

Nayanima Basu New Delhi | Updated on January 08, 2018 Published on October 27, 2017

HARSHA VARDHANA SINGH, Executive Director, Brookings India

The visa issue must not hold back overall bilateral trade, says Brookings India ED Harsha Vardhana Singh

It is unfortunate that the entire focus of India-US bilateral trade has come down to discussing the H-1B visa issue, said Harsha Vardhana Singh, Executive Director, Brookings India. He said this was a small issue in the entire gamut of bilateral trade.

In an interview with BusinessLine, Singh, who is former Deputy Director Director-General of the World Trade Organisation (WTO), said the focus should be on coherence in standards and creation of level-playing field in policies. Excerpts:

How do you read this over emphasis on trade deficit by the US with India?

There is a lot of focus on the trade deficit. But the emphasis is not so much on India than on other countries like China and Germany. The issue is how to deal with it. What the US feels is that they need to focus on job creation at home through trade agreements or through discussions with governments. This is not big a concern for India. But, as India grows and its middle class grows, the trade profile of India is likely to change. In a world where you need to have much closer links with global markets, it is an evolving scene.

So what are the main concerns of the US?

The concern on trade deficit with the US is in terms of policies which may be distorting the playing field, especially in the areas of standards. In other areas of non-tariff barriers, India is undertaking a lot of reform, easing conditions of doing business and facilitating trade. The policy on trade facilitation will take us further. Moreover, the implementation is now at the States’ level. There are efforts to link trade with global value chains and create conditions to increase trade.

What about the tariffs that the US continues to harp on?

The tariff regime in India is much lower than what people think. On an average, the tariff is low. However, there may be tariff peaks and every country has tariff peaks to address. So, to the extent there are any discussions, those would have to be linked with not only the opening of markets, which is at the moment US’ focus, but also allowing others who have similar conditions in their markets. I think some of the US’ perceptions about India are changing. Actually, India is engaging, in practical terms, in becoming a significant buyer of products from abroad. It is keen to link up with lead firms in value chains. It is also inviting FDI and foreign investments generate two-way trade.

India’s demand has always been more on services than goods. And now we have problems arising out of H-1B …

I think in a world of global value chains, to think only of one sector is not going to be useful. Services trade also has four different modes. And if India has to open up certain sectors, the US will also have something similar. But the US’ perceptions about high tariffs in India is is misplaced, in my opinion. We need to now focus on a bilateral win-win. To that extent, if both countries are seeking to push their own interests rather than recognising that they are in this together, then it becomes difficult. But if ways can be found, there can be movement ahead while maintaining comfort levels along the way.

How do you think the H-1B issue can be resolved?

The question is how big is H-1B is compared to the rest of bilateral trade. If you start looking into that, you will see that it is very insignificant. No doubt it is an important part, but the entire bilateral trade cannot be made to suffer for that. Similarly, if the US focusses only on one particular product then you cannot move forward in a positive way.

But everything comes down to market access …

Market access is not everything. There has to be regulatory cooperation and coherence on technical barriers to trade (TBT) and sanitary and phytosanitary measures (SPS). Then there has to be coherence in standards. If we have to move forward in trade then we have to address these issues. In this context, the efforts made by the government are highly underplayed. At the same time, these efforts have to be done in a coherent manner. By isolating one or two issues and making them the focal point of the entire discussion is not meaningful. We have to identify three or four different key areas to move forward and within each of these issues there has to be different ways to dealing with them. As long as countries realise that they are in a bilateral relationship, then the approach will be different. The conventional mode of thinking will not work. Trade is not a zero-sum game.

What is the solution to India and the US’ bitter fight at the WTO?

It is the right of every party to approach the WTO if they feel their rights are violated. India, US and every other country does the same. But this doesn’t mean there is a fight or tiff going on. The system then decides which side is actually inconsistent. We have to take it in that way rather than seeing it as a discord.

But the US is now threatening of imposing trade sanctions on the poultry dispute?

Under WTO, certain actions are taken under a process. So, it is up to the countries concerned to decide on their processes, there are discussions that take place and some times they reach an agreement together while some times actions are taken. This is not extraordinary.

Published on October 27, 2017
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