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Washington decries India's policy of 'self denial'

A P Kamath

While India has made significant progress in liberalizing its economy, its economic engagement with the United States and the rest of the world remains severely limited, mainly because of a policy of "self-denial", said Susan Esserman, the deputy US trade representative. She was speaking at the Center for Strategic and International Studies in Washington.

Her speech covered a wide area of economic and trade relations between America and India. Throughout the speech, she said India does not have to worry about the new economic order and global economy. If Indian liberalization continues, India could expect to see achievements similar to those achieved by Indians in Silicon Valley, she said.

"India's tariff and non-tariff barriers impede its own prospects for higher growth, rising living standards, and technological innovation. These barriers effectively raise the price of goods for families, force businesses and farmers to pay higher prices for inputs; and reduce India's overall growth prospects as competitors in China and southeast Asia move ahead."

While India's trade barriers constrain US exports to India, they also shut out the products of India's developing country neighbors in Africa, central Asia, southeast Asia and the island states of the Indian Ocean, she said.

"Many of their products, particularly tropical products, would be very competitive in the Indian market.

"A free and open Indian market would therefore serve -- much as the European Union does for the Mediterranean world and central Europe, or the United States for the Caribbean and Latin American states -- as a source of growth and economic stability for a large part of the world, integrating more fully and fairly these developing economies into the global system."

She expressed concern at the suggestions of some of Indian economists that tariffs should be increased, and surcharges imposed.

"To create even a temporary replacement for these barriers would damage American trade interests," she said. "But more so India's. This is because the market opening inherent in our agreement is consistent with the goals of India's own reform policies -- to help Indian families raise living standards as they gain a wider choice of goods; to give Indian firms opportunities to strengthen their technological base; and give Indian entrepreneurs -- so successful in Europe, the United States, Africa and southeast Asia -- a chance to create new businesses and sources of growth at home."

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