The Telegraph
Thursday , July 31 , 2014
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N-energy, chicken legs on table
Trade focus in Kerry talks

New Delhi, July 30: US secretary of state John Kerry landed here today for what New Delhi and Washington call a strategic dialogue, but economic niggles over subjects ranging from nuclear energy to chicken legs threaten to trip efforts to rekindle a relationship many argue is stagnating.

Accompanied by US commerce secretary Penny Pritzker, Kerry will meet external affairs minister Sushma Swaraj and officials from multiple Indian ministries tomorrow afternoon for almost four hours of talks that are the centrepiece of his visit.

In the morning, Kerry will meet national security adviser Ajit Doval and defence and finance minister Arun Jaitley, and later in the evening, will meet Sushma again over dinner before visiting Prime Minister Narendra Modi at his residence on Friday morning.

But Kerry sent a clear signal of US priorities on this trip within two hours of touching down here, meeting leaders of Indian industry over dinner before any of his engagements with the Indian government.

“Expanding bilateral trade and ironing out our economic differences is the single biggest priority in our view,” a US official said, speaking on condition of anonymity. “That will be the focus, because if we can get that going, other strategic areas will be easier to negotiate.”

Kerry, in his conversations with Sushma, Jaitley and Doval, is expected to discuss the political crisis in Afghanistan where two presidential candidates are locked in an electoral counting dispute, tensions in east Asia, the war in Gaza and possibly the West’s confrontation with Russia over Ukraine.

Sushma is also expected to articulate to Kerry what foreign ministry spokesperson and joint secretary Syed Akbaruddin today called “considerable disquiet in India” over allegations of US intelligence agencies spying on the Indian embassy in Washington and on the BJP.

Officials from both nations will begin fine-tuning plans for Modi’s visit to the White House on September 30.

But economic ties will underpin each of these meetings.

“If India’s government delivers on its plans to support greater space for private initiative, if it creates greater openness for capital flows, if it limits subsidies that stifle competition, if it provides strong intellectual property rights, believe me, even more American companies will come to India,” Kerry said, addressing a Washington thinktank on the eve of his departure to India. “They may even race to India. And with a clear and ambitious agenda, we can absolutely help create those conditions.”

Kerry, in his meeting with Jaitley, is expected to press the defence minister for indications of the kind of major weapons and armed vehicle purchases the Indian military is interested in, and argue for American firms that are keen to sell these to India.

India, in the dying months of the UPA government, confirmed that it would purchase howitzer guns from the US, but Jaitley’s decision to lift the foreign direct investment limit in defence to 49 per cent has left American and other foreign firms salivating.

The foreign office is also preparing for talks on a standoff over India’s nuclear liability law that has effectively stalled business here for American nuclear firms despite the Indo-US nuclear deal of 2005.

Nuclear equipment vendor Westinghouse last year inked a preliminary pact with the Nuclear Power Corporation of India Limited to set up a nuclear power complex in Gujarat. But the American firm has refused to sign a final contract because the US argues India’s liability law exposes suppliers of equipment to unreasonable risks.

Kerry’s deputy in the US Department of State, William Burns, had articulated these concerns when he met Modi earlier this month. Burns later said Modi, chief minister of Gujarat till this May, was aware of America’s concerns over the proposed nuclear plant in that state.

Chicken will figure too. The US, where chicken legs are less popular than breasts, has been keen to sell chicken legs to India, where they’re liked. But India is enforcing a 100 per cent import tariff on cut chicken and 30 per cent tariff on uncut, whole chicken.

Pritzker is expected to ask India to lower import duties on chicken legs — a move the Indian ministry of external affairs is not averse to, but that the commerce ministry has so far opposed. Indian basmati and fruits, officials argue, face similarly high import duties while entering the US.

India’s refusal to agree to a key World Trade Organisation pact on trade facilitation will also be a key component of the talks, officials indicated.

Senior officials of the Barack Obama administration have over the past fortnight twice deposed before US Congressional committees on India-US relations under Modi.

Assistant Secretary of State Nisha Desai Biswal and Deputy Assistant Secretary of Commerce Arun Kumar, the Obama administration officials, on each occasion underlined their hope for stronger economic convergence with the new Indian government than the US had with the earlier Manmohan Singh government.

Kerry, in his Washington statement yesterday, echoed them.

“India has a decision to make about where it fits in the global trading system,” Kerry said yesterday. “India’s willingness to support a rules-based trading order and fulfil its obligations will help to welcome greater investment from the United States and from elsewhere around the world.”