The Telegraph
Tuesday , July 29 , 2014
CIMA Gallary

Trade agenda set for US chat

New Delhi, July 28: Tough US rules on oil and gas along with India’s stern stand at the WTO talks on farm subsidy will be the talking points at a meeting this week of key leaders from both nations.

US secretary of state John Kerry and US commerce secretary Penny Pritzker will meet Indian leaders, including Prime Minister Narendra Modi, in the capital.

The leaders will discuss the possibility of waiving laws that force the US to sell oil and gas only to the countries with which it has free trade pacts .

Such a move could allow Indian companies, including Reliance, to import cheap shale gas from the US.

Also on the agenda will be the US’s concerns over intellectual property protection, especially in pharma, and irritants such as punitive duties on Indian steel, both of which were hurdles in India’s $100-billion-a-year two-way trade with the US, the world’s biggest market.

The US has already offered a special waiver to GAIL, India’s state-run gas pipeline giant, to buy shale gas from America.

GAIL can now import 3.5 million tonnes per annum of gas for 20 years starting 2017-18 from Sabine Pass LNG.

US laws do not normally allow the sale of oil and gas to any country with which it does not have a free trade agreement.

This law restricts US exports to the North American countries under the NAFTA trade pact.

However, GAIL was given a special waiver earlier this year.

Reliance has three joint ventures in the US to exploit shale gas assets. These are with Chevron, Carrizo Oil, and Pioneer Natural Resources.

In its latest annual report, RIL said it had invested $7.96 billion in the three US joint ventures since 2010.

Pharma tiff

American trade negotiators are likely to push the Modi government to delay the generic manufacturing of a dozen or so patented drugs used in treating life threatening diseases, which an inter-governmental committee is currently studying.

Officials said the US trade representative had earlier made it clear that the US would publish a federal register notice and initiate an out-of-cycle review of India in August-September 2014, which can lead to sanctions.

During her visit to India, US assistant secretary of state Nisha Biswal had said: “There’s concern whether next-generation drugs would be protected, and how do you ensure that investments that are being made to develop ever-more effective drugs can then be continued.”

Besides manufacturing for the domestic market, India exports about $20 billion in generic drugs and the US fears that growing exports will cut profits and jobs back home.

Punitive duties

The US has been imposing punitive duties on Indian exports, including steel. Despite a recent WTO ruling in favour of Indian steel exporters, officials feel the attempt to classify exports as dumping by the US is a continuing problem.

In return, India, too, has ordered punitive action against US manufactures.

Two months ago, India warned the US of anti-dumping investigations against its solar panels, after Washington took India to the WTO over the use of domestic components in India’s solar programme.