Secretary's Speech

Secretary of Commerce Carlos M. Gutierrez
U.S.-India Business Council
Washington, D.C.

Thank you for inviting me to speak today. It’s a privilege to be here once again as a guest of the U.S.-India Business Council. I appreciate all that you have done to strengthen the bonds between our two nations.

When I spoke to you here in February, we focused on high-tech trade. Today, I’d like to address the growth that is rapidly transforming our overall relationship. The actions that we take to strengthen and expand our ties today will shape the trajectory, speed and success of our common interests and economic outlook for years to come.

President Bush and Prime Minister Singh have regularly reinforced the importance of our relationship. The United States and India have been on a path of fast paced trade and investment growth based on our shared commitment to democracy.

I’d like to thank Minister Nath and Ambassador Sen for their participation today and for their continuing partnership with us.

The deepening of our ties has been good for both of our economies. In India, millions have been pulled out of poverty, while millions more have now entered the professional and consumer class.

Quite a few of these Indian consumers and the companies they work for are investing in the U.S. or buying American products.

• U.S. exports to India have increased faster than any other large export market in Asia, doubling to $10.1 billion since 2003 and surging 24 percent so far this year.
• Over the last five years, advanced technology exports alone were up 145 percent to $3.3 billion.
• While U.S. investment in India grew 10 percent in 2005 over the previous year, Indian investment in the U.S. more than doubled.
• Today thousands of Americans are working for Indian companies that have made investments here.

India’s growth is transforming large swaths of the subcontinent. Last year India’s GDP increased 9.2 percent, among the fastest growth rates since independence 60 years ago. In fact, just the growth alone in India’s economy last year is the equivalent of the entire Indian economy of 35 years ago.

Although both U.S.-India trade and investment start from a relatively low base, the rapid pace of growth holds the prospect of sustained collaboration in a wide variety of industries, including sales of defense, energy and high technology products.

In fact, the Department of Commerce led a very successful clean energy trade mission to India just two months ago. Increasing trade in this sector is a great example of cooperation which benefits us all. U.S. companies are able to introduce new products which will help India meet its surging energy needs in a sustainable way.

The U.S. has been a good partner for India by:

• Creating an open investment and trade environment;
• Improving the export licensing process;
• Cooperating on enhanced intellectual property rights enforcement; and
• Developing and supporting public-private partnerships, such as the Commercial Dialogue and the CEO Forum.

The challenge today is: where do we go from here? Together, how can we sustain growth and expand our relationship so it can reach its full potential, benefiting both the United States and India?

I believe this can best be accomplished by providing our people with access to the best products and widest variety of choices in the world.

We can do this by increasing the competitiveness of our economies, and by opening them as much as possible to trade and investment. And the converse is also true. Those that fail to support open markets should not expect to reap its benefits.

For all that has been accomplished so far, there is more we should do—that we must do—to continue the strong pace of growth.

After all, although our economic relationship has significantly grown recently, we can do more.

For example, last year trade with our CAFTA-DR partners in Central America was $38 billion, $6 billion more than with India. This is true even though India’s GDP, at $887 billion, is nearly eight times larger than all six CAFTA countries combined.

One area where India’s constructive engagement is required is for the success of the Doha Round of the World Trade Organization.

We are willing to make difficult choices. But we have a shared responsibility to make the round a success, and in our view, India needs to do more.

The recent G-4 meetings in Potsdam failed to move Doha forward because, frankly, some WTO members continue to be unwilling to show needed flexibility or even a minimal amount of additional market access. Large developing countries must step up.

India will benefit greatly from an ambitious Doha outcome. It is in India’s national interest to be a leading voice in the developing world, a voice that steps up and offers real reform and real progress at the Doha Development Round.

Without new trade flows, including the further stimulation of trade among developing countries, the economic growth and development goals that launched the Round cannot be achieved.

Bilaterally, we encourage India to lead by responding to the openness we have provided for Indians who participate in our market, a presence which has benefited both economies.

There remain significant restrictions on American investment in India. These restrictions are not present for Indians who wish to invest in the United States.

Allowing greater foreign participation in pensions, insurance, banking, and multi-brand retail in India will bring, greater efficiencies, better prices, new products, and more choices will be available to Indian consumers.

Without providing adequate protections innovative pharmaceutical producers, companies that have spent heavily on research and development will hesitate when considering innovation driven investments in India.

They seek and deserve a strong regime for protection of pharmaceutical test data. Without such assurances, Indian consumers will continue to be denied access to products based on those innovations.

While we applaud India for unilaterally reducing tariffs on many imports over the past few years, there are categories of products where more can be done. For example,

• Distilled spirits and wines:
• Large motorcycles; and
• Recently announced tariffs on general aviation aircraft were a step backwards.

This will reduce the competitiveness of all those who could benefit from a robust civil aviation industry, such as Indian component manufacturers, Indian rural air services and Indian regional package delivery, for example.

One of America’s great export strengths is the millions of tons of grain we export to the world. Indeed, we were the world’s leading exporter of wheat last year, feeding millions of people in 110 countries.

The only major country American wheat farmers can't export to is India, where restrictions on wheat imports effectively prevent American farmers from bidding on contracts to India.

Ultimately, Indian consumers pay the price. This year the Indian government will pay tens of millions of dollars more because of these barriers on American wheat imports. This is a concrete example of the cost of trade restrictions—and the benefits that can be had by reducing barriers to trade.

We understand the challenges and benefits of trying to lead in a democracy, and in that respect those challenges are not dissimilar from our own.

The benefits to India of a sustained, broadened and enhanced trading relationship are too significant to ignore… and the perils of going backwards or standing still are too great. It is incumbent upon us and our institutions to seek ways to support one another as we move forward.

We can’t be complacent. The world is spinning faster, and countries need to take every opportunity to improve competitiveness or risk being left behind.

The U.S.-India Business Council and its members have been at the forefront of advocating for increased trade between our two countries. In order to achieve the goals we all seek, we must make our positions known clearly and unambiguously.

We need to stand together on important issues, such as Doha. We all benefit from success in that forum, but no one will benefit more than advanced developing economies such as India.

We are proud to be India’s partner as it continues to expand its role as a global leader. As India does so, having an anchor relationship with the U.S. will prove to be critical in accelerating the benefits of reform.

When we work together, we can enhance prosperity, improve the lives of our citizens, and make the world a better place.

Let me make one final comment on immigration reform, which is center stage in Washington, D.C. this week. The U.S. has benefited greatly from the contributions of immigrants. Immigration has been our historic strength and competitive advantage. All those who care about the continued strength and vibrancy of the U.S. economy should hope for comprehensive immigration reform.

Thank you very much.