Recession in US, doubling of H1-B visa fees root of trade disputes between India-US: Deepa Ollapally

Fundamental differences will continue to dog relationship: GWU professor.

By Sereen Thahir

WASHINGTON, DC: The past few months have seen a rise in rhetoric as well as actions between the United States and India especially in regard to their trade relations.

The United States has filed two cases with the World Trade Organization against India. One is in regard to the mandated quota of local creation of materials set by India to make solar panels in their developing solar industry, which the United States sees as a threatening trade barrier. The second case is in regard to intellectual property rights in the medicinal field.

The United States views India’s laws on intellectual property as lax. In response to the filing of cases, India has instructed officials not to allow such investigation requests into its trading practices. In addition, India has advised the delay of meetings with U.S. trade representatives until after its elections, though claiming it has nothing to do with the trade tensions.

The roots of the escalation are difficult to discern. Some in the Indian media cite the Devyani Khobragade incident as a reason for India to distance itself from the United States. The American stance seems to come as a reaction to its industrial and medical constituencies, feels the media here.

Professor Deepa Ollapally of the Sigur Center for Asian Studies at George Washington University, in an interview to The American Bazaar, said she doesn’t see the situation as a trade war, “but there are some fundamental differences in economics and trade that will continue to dog the relationship.”

Ollapally cites the roots of the trade tension as partly due to recessionary conditions in the United States and doubling in H1-B visa fees that hurt Indian high-tech companies.

In addition, she says there has been much criticism about the double standard that the American government has regarding its own agricultural industry; India potentially sees the protectionist policies of American agriculture and complaints about India’s solar industry as hypocritical.

Does this mark a turning point in Indian-American trade relations?

Ollapally does not think so, saying that despite the rhetoric on both sides, the fact that the two nations are strategic partners in a variety of sectors implies that “this latest trade controversy is not going to be that damaging.”

Statements made by several Indian government officials, saying “they should be looking at the larger picture,” back this assessment.

Trade between the two countries grew to $100 billion, as investment and exports amounts have also risen. It seems as though tensions between the two countries are likely to be resolved if this primary discrepancies are addressed in bilateral talks. The escalation of tensions could spill over and threaten other strategic relations, such as those relating to security and diplomacy in the region, where both countries stand to lose a great deal, said Ollapally.

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