Applying trade measures to arm-twist the domestic industry in different countries is an of-used strategy that has the support of the United States trade policy. And the Special 301 report expected later this month and the General System of Preference (GSP) are tools in this armour.

The Special 301 Report classifies countries into three groups of priority foreign countries (PFC), priority watch list and watch list, on the basis of inadequate intellectual property protection and enforcement, as seen from a US industry perspective. As a result, countries like India that fully comply with the more international TRIPS Agreement do not find a favourable mention in the report.

The US Trade Act obligates the government to enter into negotiation with country/s in the PFC list and impose trade sanctions in case of failure of negotiation. Such unilateral actions in a post-WTO era are illegal. In fact, the US had provided a written undertaking that it would not resort to unilateral action without informing the WTO Appellate Board. And yet it continues to use its pressure tools. In any case, the US can use only the withdrawal of GSP or the concessional import tariff provided to exports from certain least developed and developing countries, as a trade sanction under Special 301.

India is an almost permanent name on the Priority Watch List due to its development-friendly IP laws. However, in 2014, there was an orchestrated campaign to include it in the Priority Foreign Countries list citing granting of compulsory licence and the curbs on patenting of the known substance, as reasons. The setting up of a bilateral mechanism between India and the US to discuss IP in 2014 eased some of the pressure on India. In the build-up to this year’s Special 301 report, the submission of PhRMA, the Big Pharma lobby recommended continuation of the Priority Watch List status to India, citing inadequate patent protection, the absence of data exclusivity, price control mechanism, high import duties, etc. Its concerns on the Indian Patents Act also include its emergence as a model law. The submission states: “is this a concern in the Indian market, but also in other emerging markets that may see India as a model to be emulated”.

The US industry is also using review of GSP to exert pressure on India against price control. The medical devices industry approached the US Trade Representative in 2017 October demanding the partial or full withdrawal of GSP in the light of price control on cardio-vascular stents and knee implants. On April 12, the US Trade Representative (USTR) announced the review of India’s GSP eligibility criteria. The communication clearly stated that the move is on the basis of complaints received from the medical devices and dairy industry. And interestingly, the press communique was issued after the USTR’s visit to India.

Retaliation strategy

Data shows that price control affects the high margins of hospitals and not medical devices manufacturers. But the market-oriented US industry seems oblivious to such practices that facilitate the exploitation of patients.

A review or withdrawal of GSP can affect some exports from India. Even though the difference average between GSP tariff and non-GSP tariff is only 4 per cent, some products receive huge concessions. At this point, Government of India should carry out an analysis of the cost of GSP withdrawal. Further, India could also explore a retaliation strategy such as hiking tariffs on certain products coming from the US, like Harley Davidson bikes and almonds, for example.

With this being the reality of the international trade arena, the Centre needs to place its citizens’ health above trade interests and uphold its constitutional obligation on the right to health. The Special 301 report and other policy pressures aside, trade will learn to work with a country within its framework for public health. And that’s something the Indian government needs to always keep in mind.

The writer is with the Third World Network

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