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US Holds Talks With India, Seeks Action On Trade

Wed, 06/13/2012 - 2:18pm
Matthew Pennington, Associated Press

WASHINGTON (AP) — Secretary of State Hillary Rodham Clinton called for the U.S. and key Asian partner India to translate their increasingly close ties into benefits by boosting trade and investment, expected to top $100 billion this year.

The two governments held their annual strategic dialogue in Washington on Wednesday, seeking to boost relations that have blossomed in recent years but have yet to meet U.S. hopes for greater market access for its companies.

"It's not enough just to talk about cooperation on issues ranging from civil nuclear energy, attracting U.S. investment to India or defending human rights or promoting women's empowerment," Clinton said in an opening statement, alongside India's foreign minister, S.M. Krishna.

"We have to follow through so that our people, citizens of two, great pluralistic democracies, can see and feel the benefits."

One obstacle to improving ties was lifted ahead of the dialogue, as the U.S. on Monday dropped the threat of U.S. sanctions against India for its large yet declining oil imports from Iran. That is one of various diplomatic issues on which Washington and New Delhi — proud of its independence in foreign policy — have not always seen eye-to-eye. That's despite their shared strategic interests in areas such as fighting Islamic militancy and managing the rise of China.

Clinton said India understands the importance of denying Iran a nuclear weapon, and credited New Delhi's efforts to diversify its sources of crude oil to rely less on Iran.

Two years ago, President Barack Obama declared that the U.S.-India relationship would be a defining partnership of the 21st century. Security cooperation and defense sales have grown rapidly, and Washington looks to New Delhi as a partner in the economic development of Afghanistan, but some analysts say the relationship is being oversold.

Krishna echoed Obama's sentiment, but said the challenge now is "how to harness the full potential" of the relationship. The two countries have cooperated on education, energy and climate change, science and technology, and health. Defense Secretary Leon Panetta visited India earlier this month, and Treasury Secretary Timothy Geithner will become the fifth Cabinet-level U.S. official to do so this year when he travels at the end of June.

But India has struggled to deliver on the kinds of economic reforms that Washington wants, changes that would provide more opportunities for U.S. businesses. In November, Prime Minister Manmohan Singh's government backtracked on plans to allow foreign investment by such companies as Wal-Mart in its supermarket — or "multibrand" — retail sector after it ran into domestic opposition.

Clinton said two-way trade and investment has grown 40 percent since 2009, but declared there is "a lot of room for further growth." She said the U.S. looked forward to advancing negotiations on a bilateral investment treaty to reduce barriers.

She welcomed the signing, announced Wednesday, of an agreement between Westinghouse Electric Co. and the Nuclear Power Company of India Ltd. allowing preliminary site development for future construction of nuclear power plants in western India.

Clinton said it was a significant step toward the fulfillment of a 2008 India-U.S. civil nuclear agreement. That landmark pact, negotiating by the administration of President George W. Bush, allowed India access to technology from international suppliers it had been denied since it conducted its first nuclear test explosion in 1974.

But Clinton said there was still a lot of work to be done to address the implications of Indian nuclear liability legislation that has effectively blocked U.S. suppliers from capitalizing on the agreement.

Scott Shaw, a spokesman for Westinghouse, said by email those issues will need to be addressed before signing any final agreements for the project in India's Gujurat state.

Another area of intense commercial interest to the U.S. is India's defense sector, with sales exceeding $8 billion in the past five years, reflecting growing ties between the two nations' militaries. Clinton said the U.S. was convinced that they can in the future conduct with India joint research, development and co-production of defense systems.

The U.S. increasingly looks to India as a partner in developing Afghanistan, where New Delhi has provided some $2 billion in assistance. Washington also wants India to play a more active role in training Afghan security forces as the U.S. and its NATO allies plan to withdraw combat forces by 2014.

India will be looking for reassurance that the U.S. will retain a substantial presence in Afghanistan beyond 2014 because of concerns for that country's stability as Western forces withdraw after a decade of fighting the Taliban and al-Qaida.

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