An Obama-Singh Agenda: Voices of Experience

Indian Prime Minister Manmohan Singh and the President of United States of America, Barack Obama, at the Joint Press Conference, in New Delhi on November 8, 2010

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Washington, DC – According to senior US officials, the meeting this week between President Barack Obama and Prime Minister Manmohan Singh at the White House will primarily focus on economic issues, specifically what the two countries can do together to generate economic growth. Few would disagree that this should be at the top of their agenda.

So, what can the president and prime minister accomplish during their relatively brief time together?

First a reality check is in order. The two leaders should have a candid exchange to discuss the domestic challenges they face at home—Obama, most immediately with multiple flash points in the Middle East and upcoming budget ceiling battles with Congress; Singh with a slumping economy—“India on the Brink” says The Economist; “India in Reverse” says the New York Times—and next year’s national elections and the concomitant prospects for a “lame duck” government. Domestic considerations will understandably constrain the degree to which Washington and New Delhi will be able to focus bandwidth on the bilateral relationship in the immediate months ahead. Neither should be surprised nor take this amiss.

That said, Obama and Singh can use their time together to agree on a common set of issues that hold back our economic ties and issue appropriate instructions to their respective deputies to resolve these priority issues as quickly as possible.

Ambassador Charlene Barshefsky, US trade representative during President Bill Clinton’s second term, recently spoke at a CSIS event on “US-India Economic Relations: A Reality Check” and identified several key policy areas that must be addressed to improve our trade and commercial relations.

But President Obama and Prime Minister Singh should not let the vexing economic issues in their respective in-boxes dominate their meeting. They should also take this opportunity to articulate several longer-term goals that will underscore tangible and important benefits to both sides of the US-India strategic partnership. Regarding this longer-term perspective, former US ambassadors to India Frank Wisner, Richard Celeste, and David Mulford were asked to provide their thoughts.

Dealing with the Present

According to Ambassador Barshefsky, the US-India economic relationship “should be stronger and more robust than it is by virtue of the size of our economies and populations, as well as the strength of our strategic relationship. Despite being on track to become the world’s third largest economy, India is only America’s 13th largest trade partner.”

What’s holding it back? In her view, there are three broad areas that India must confront to improve trade relations with the United States: the economic slowdown that has diminished the value of India’s currency (the rupee has tumbled by 13 percent in three months); a set of “vexing regulations and a very challenging rules system” that businesses struggle to navigate; and market access barriers that include tariffs, “buy local” requirements, and lax intellectual property protections.

At the same time, she said, the United States should respond to the concerns India has expressed about U.S. policy. “First, the intractable immigration debate in the United States over illegal immigration risks jeopardizing a key fundamental of growth: a legal immigration system that allows for the free movement of highly skilled workers.” And second, “The US should address India’s concerns over the equalization of social security taxes paid by Indian workers under the H-1B program.”

Should Obama and Singh use their meeting to make progress on resolving some of these very difficult issues, Ambassador Barshefsky concluded, they would “put the economic relationship on a much more positive and accelerated trajectory.”

Looking to the Future

The Wadhwani Chair at CSIS posed a specific question to three former US ambassadors to India: What kind of relationship should the United States and India aim to have 10 years from now?

Ambassador David Mulford’s response provides an excellent segue from where we are today in the US-India economic relationship to where the two should be a decade from now: “Ten years from now the United States should be able to look back on a period where it has successfully encouraged and assisted India to improve its policies across the board to achieve high growth (7–9 percent per annum) and to help India to extend improved policies in health care, agriculture, science and technology. Stronger growth in India should be a US priority because it is the most effective way to lift tens of millions of people from poverty. India’s rural economy has begun an historic transformation that is aspirationally driven from the ground up. This phenomenon is hard to measure but is clearly present and relatively independent from India’s urban economy and middle class economy. Essential features of this change must include improved fiscal policies in India, reduced subsidies, the opening of markets to both foreigners and Indian operators, promoting changes in regulations such as multi-product retail liberalization, intellectual property protection enforcement, and more open and dependable investment rules. We are positioned to achieve this across the board dialogue with India, but we must find better ways to engage India and to strengthen private sector relations in investment and trade.”

Ambassador Frank Wisner’s response widens the lens beyond the critically important economic dimension of the relationship to its overall strategic importance: “India and the United States need to adjust further the goals they set for the relationship. Of course, we have come a long way over the past decade and a half, but we and the Indians need to rethink the strategic direction we are traveling. On the Indian side, India’s political leadership needs to adjust further its view of the United States and recognize it as a key partner in forging a place for India at the world’s ‘high table.’ India should consider the United States as an important element in maintaining a balance of power in the Asia-Pacific area and as India’s key partner in commerce, capital mobilization, and technology transfer. The United States should not look to India as the opposite party in a transactional relationship, expecting to see every gesture matched by an equivalent move. Americans should expect Indians to protect their ability to maneuver on the regional world stage. Instead the United States should regard a stronger India as an American interest and recognize that our shared values and perspective are long-terms assets for the United States.”

Finally, Ambassador Richard Celeste’s response lends further support to the statement made by President Obama during this 2010 visit to India—that India will be “one of the defining partnerships of the United States in the 21st century.”

“I would expect that a decade from now, India would rank just behind Canada and the United Kingdom as our most valued global partner. By almost every measure—creating a stable balance of interests in Asia, promoting a global knowledge economy, fighting cross border terrorism, addressing global poverty, achieving sustainable growth, and tackling climate change, frankly addressing almost any fundamental problem shared by the family of nations—India’s participation as a leader is critical.” 

© 2013 by the Center for Strategic and International Studies. All rights reserved.

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