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India and the United States: An Emerging Global Partnership

By David H McCormick
December 05, 2005 21:53 IST
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David H McCormick, US Under Secretary of Commerce for Industry and Security, delivered this speech at the World Economic Forum India Economic Summit 2005 in New Delhi on November 28.

I am delighted to share the podium with Foreign Secretary Saran. The theme of this conference is "partnership," and Foreign Secretary Saran has been a good partner indeed. I look forward to working with him closely in the coming years through the US-India High Technology Cooperation Group.

I mentioned to Ambassador Sen several weeks ago of my great affection for India, developed through a number of business visits over the past ten years. During these visits, however, I was a businessman selling technology and services to Indian companies and global companies with operations in India. This would be my first visit, I told him, to India as a government official and diplomat. With a smile, Ambassador Sen assured me that I would have plenty of opportunity for selling and negotiating in my new role in government.

With that in mind, I am here today to talk to you about recent and remarkable developments in the US-India relationship as well as to describe to you some of the seeds of that success. I'd also like to speak with you briefly about the important mandate of the High Tech Cooperation Group, which Foreign Secretary Saran and I co-chair, and the critical role that it can and should play in helping to push the US-India relationship to even greater heights in the months and years ahead.

I. Global Dynamics

The world is changing before our eyes under the transforming effect of globalization. 'Globalization' is a broad concept. To understand how it is drawing our two countries together, we need to look deeper at the forces that are shaping our world:

1. The first force is the unprecedented spread of democracy throughout the world since the end of the Cold War. According to the latest Freedom House figures, there were only 76 electoral democracies in 1991. Two of the most important, then as now, were the United States and India. Since then, our club has expanded to 119. And this spread of democracy has positive implications for global security and prosperity, since democracies are uniquely suited to deliver both freedom and economic opportunities to their people.

2. Second, and in tandem with the spread of democracy, has been the expansion of the global free market. The last quarter of a century has witnessed the liberalization of economies throughout the world. Nowhere is this more true than in India. Fifteen years ago, then-Finance Minister Singh helped take the courageous step to begin opening up India's economy to the world. Now, as a consequence of this bold action, and along with its extraordinary resources and human capital, India is emerging as a model for the world.

3. The third fundamental force that is shaping our world is the technological revolution. As a former technology executive, I find the most striking aspects of this revolution to be its pace and durability. Every time it appears that we have reached a technological ceiling, the revolution moves into higher gear. America and India's close technological ties are helping to drive this revolution. Today we find Indian entrepreneurs and engineers in America developing cutting edge technologies, while American companies look to India to design software and high-technology products. In the Research and Development centers of Bangalore, Silicon Valley, or Carnegie Mellon University in Pittsburgh, where I am from, US and Indian entrepreneurs are increasingly interdependent.

4. Finally, the geopolitical changes of the last 15 years have been truly astounding. As a number of nations burst on the international scene economically, politically, and strategically, the global landscape has become truly dynamic. All the world recognized the impressive economic performance and determination of India and its people. Within this context, both the United States and India recognized the significant need for, and value of, closer ties in all arenas. No where is this more evident than in our close cooperation in ensuring the spread of democracy and security in Afghanistan.

II. The Emerging US-India Partnership

Four years ago, these forces helped to draw the US and India into a new, more productive and ambitious relationship. In November 2001 our two countries pledged to qualitatively transform US-Indian relations and a true strategic partnership began to form.

Since then, our two countries have made astonishing progress, culminating in the July 18th announcement between President Bush and Prime Minister Singh. That announcement not only recognized the progress to date, but pledged to accelerate the strengthening of US-India relations in five critical areas:

1. The revitalized Economic Dialogue, which has produced progress in linking our two countries on issues of finance, trade, commerce, energy, and the environment. This dialogue has led to tangible results: for example, since 2002 U.S. exports to India have nearly doubled from $4.1 billion to an estimated $7.5 billion this year. The formation of a CEO Forum, drawing on the expertise of the top Indian and US corporations, will further harness private sector energy and ideas to deepen our bilateral economic relationship.

2. Turning to the energy and environment dialogue, both sides have made great strides in strengthening energy security and ensuring adequate, affordable energy supplies across a wide range of energy sectors. The commitment announced on July 18th to engage fully in civil-nuclear cooperation will further reinforce this partnership and facilitate long-term energy security for both our countries.

3. As mentioned earlier, through the democracy and development dialogue, both countries have recognized that the spread of democracy has truly positive implications for global security and prosperity. The value of our partnership on this front is evidenced by our close collaboration on issues of democracy and development around the world, in places like Bangladesh, Sri Lanka, and Afghanistan.

4. In the area of nonproliferation and security, the July announcement represented a significant step by confirming our joint commitment to playing a leading role internationally to prevent the proliferation of weapons of mass destruction. At the same time, it confirmed our close military cooperation. These enhanced military-to-military ties, including the recent joint exercise between our two navies, has been one the great success stories of the last four years. Further, two important defense forums have been formed -- The India Defense Industry Symposium and the Defense Procurement and Production Group -- to provide new frameworks to oversee US-India defense trade, procurement, co-production, and technology transfer.

5. Finally, both sides agreed to continue the close cooperation in high technology and space research. We have already seen enhanced cooperation on space exploration and satellite navigation and launch. For example, the United States and India are working side by side on using satellite navigation technology to increase civil aviation safety. This type of collaboration could never have occurred in the past, but we have now opened the door for this project and other future projects that allow American and Indian companies to work together on a wide range of projects.

III. The Path Ahead for the HTCG

Unique in its mandate and focus, the US-India High Technology Cooperation Group is a critical and mutually supportive component of these dialogues.

The HTCG was formed in November 2002 to provide a standing framework for discussing high-technology issues of mutual concern. Both sides agreed that the HTCG should have two primary and interrelated objectives:

1. The first was to strengthen nonproliferation through enhanced dual-use export control cooperation. This cooperation would, in turn, build confidence for greater bilateral trade in dual-use goods and technologies.

2. The second was to develop and promote high-technology trade more broadly by focusing on cooperative steps both sides can take to create the appropriate economic, legal, and structural environments necessary for successful high-tech commerce.

These steps have yielded real results:

1. The HTCG has had a positive and tangible effect on licensing statistics. Since 2002, India has had far greater access to US technology as the US has loosened controls on certain dual-use items. We have lowered the average processing time for licenses for India such that they are now similar to many other US partners and allies, such as the United Kingdom, Israel, and France. Only about 1 percent of total US trade with India requires an export license and over 90 percent of all licenses are approved. Finally, while total US exports to India have increased, licensed dual-use exports have declined, as fewer technologies now require a license.

2. In the area of US policy changes, the HTCG has fostered the exchange of information that has reduced confusion over export policies and procedures on both sides, benefiting our two governments, as well as the private sector. With the removal of some Indian end users from the US Entity List, more US high-technology items may be exported to India without a license for civil-space and civil-nuclear end uses

3. The HTCG has also contributed critical support for India's export controls. The passage of the landmark WMD law establishing an export control system was a major achievement and a clear indicator of India's commitment to nonproliferation and the US-India relationship.

The success of the HTCG in these areas been due to several key factors:>
1. This dialogue has a successful tradition of focusing on those barriers to high-technology trade that have identifiable remedies with the potential for tangible "wins." To this end, the HTCG has focused on key industry sectors that have been affected by tariff and non-tariff barriers, including export controls, that limit innovation and hinder trade.

2. Importantly, we have included industry in this dialogue. The business community is best situated for identifying the barriers to trade in their commercial sectors and proposing solutions that make sense. As a consequence, the HTCG has seen great progress in areas such as defense trade, biotechnology, and information technology. Critical to the process are breakout sessions, in which private sector participants develop specific recommendations and action plans that government can consider, and when appropriate, implement to reduce barriers to high technology trade and collaboration.

3. Finally, the HTCG participants have been consistent in their commitment to candid and open discussions. And their willingness to communicate not as one side against another, but rather as partners working toward a common goal. This has created trust on both sides, and in turn progress.

As a consequence of these factors, the HTCG has also been instrumental to the creation and successful completion of the Next Steps in Strategic Partnership. While two separate initiatives, the HTCG complemented the NSSP by dispelling misperceptions about US export controls, facilitating the exchange of information, and organizing technical exchanges and outreach with India.

I can say with great confidence that the HTCG is more important than ever before to the Agenda laid out in the July announcement and to overall US-India relations. Our challenge is to build on our past success while effectively integrating the HTCG's mission into the other bilateral dialogues. This week's HTCG meetings represent an exciting opportunity for our governments to work with the private sector to adopt an ever more results-oriented" approach that seeks to obtain measurable progress in very specific areas -- such as investment in defense trade, biotechnology, information technology, and nanotechnology -- all of which feed into the dialogues identified by the President and Prime Minister in July.

In addition, we will continue our discussions on strategic trade and export controls with frank exchanges on US and Indian licensing trends as well as on the effective implementation of the recently passed WMD law. These close consultations on strategic trade issues are critical to our technological, economic and political relationship and help build the confidence necessary to further broaden high-technology trade, investment, and cooperation.

Our world today is one of unique peril and unprecedented promise, bringing the United States and India ever closer together. I can't imagine a more exciting time in the history of our two countries.

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David H McCormick