Obama Drops the Ball on India (Page 2 of 2)

To his credit, Obama’s so-called “pivot” towards the Asia-Pacific acknowledges the region’s vast potential to support American jobs in the 21st century. The president signed into law – after a two and a half years delay – a job-creating free trade agreement with South Korea. The administration is now in discussions with eight Trans-Pacific Partnership countries to finalize language on a regional trade agreement with the goal of “eventually creating a free trade area of the Asia-Pacific.”

However, when it comes to India, one of the world’s most dynamic economies, the administration’s actions fall short. Obama has shown zero interest in pursuing a Free Trade Agreement with India, and other important economic discussions are moving at a snail’s pace.

Meanwhile, global competitors, such as Europe and Japan, have actively pursued strategies to knock down trade barriers with this expanding market. India has already locked a tariff-slashing trade agreement with the Association of Southeast Asian Nations, and has implemented additional economic pacts with Japan, Malaysia, South Korea, and Thailand. New Delhi is expected to conclude an agreement with the European Union, one of its largest trading partners, and is in ongoing talks with Australia and Canada to liberalize commerce in goods, services, and investment. Indian Foreign Secretary Ranjan Mathai recently stated: “The United States is the only advanced economy in the world with which India has not concluded or is pursuing a Comprehensive Economic Partnership Agreement.”

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If Obama wants Indian companies such as Essar and TATA to make future investments in the United States, there are important steps the administration must take. First, finalize a Bilateral Investment Treaty, or BIT Treaty, with India. Washington and New Delhi first agreed, in principle, to negotiate a BIT Treaty under the Bush administration in 2008. The proposed pact would provide a predictable investment environment for companies in both countries by expanding legal protections and rights for investors abroad. However, some argue the White House is dragging its feet, despite the fact that the United States has already negotiated investment treaties with 48 other nations.

Members of Congress are increasingly impatient. Senators Mark Warner (D-VA) and John Cornyn (R-TX) co-sponsored a bipartisan letter that urged the administration to “expedite the ongoing discussions about the treaty as part of a proactive engagement strategy that will produce tremendous benefits for American companies and investors, as well as for their Indian counterparts.” The senators – and American companies – realize that failing to move forward with the BIT Treaty will result, at the least, in lost opportunities for U.S. businesses.

Second, begin negotiations on a free-trade agreement. Realistically, election year politics will prevent such a pact from gaining traction in 2012. However, this shouldn’t prevent Obama’s team from moving forward with the concept. The U.S.-India relationship is built on bold initiatives, and expanding opportunities for greater people-to-people contact through a free trade agreement is the next logical step.

But the president’s slow movement on these important trade matters is indicative of an administration that has consistently mishandled – and undervalued – relations with New Delhi. Consider: Obama skipped India on his maiden trip to Asia in 2009; Obama and Chinese Premier Wen Jiabao repeatedly discussed the expanded roll Beijing could play across India’s backyard in South Asia; and last year, President Obama took seven months to nominate a replacement Ambassador to New Delhi. It’s no wonder, as two Washington-based analysts wrote in December, that the U.S.-India relationship “has lost momentum.”

In December, Deputy Secretary of State William Burns said that too often, “rhetoric tends to outpace the reality” when it comes to U.S.-India cooperation. When it comes to expanding trade ties with Asia, the administration is talking a big game.  On India, it’s high time for the administration to step up to the plate.

Patrick Christy is a policy analyst at the Foreign Policy Initiative.

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