Transcript of the Press Conference by Commerce & Industry Minister Anand Sharma at Willard InterContinental, Washington, DC
June 18, 2009
MODERATOR: (Mr. Rahul Chhabra) – It's give me great pleasure to welcome Mr. Anand Sharma, Commerce & Industry Minister. He’s been here in Washington for less than two days. As you’re aware, he arrived the day before. He’s had several bilateral meetings. He’s met his counterpart; he’s met Secretary Clinton and several others. He’s attended several events in Washington. You saw the press release that was issued last night.
We also have Ambassador Meera Shankar here today with us. Welcome, ma’am. At this moment, just in case you haven’t already turned your cell phones to silent, please do turn them off to silent. And the minister is leaving straight from here; in fact, he’s leaving for New York. So without any further ado, may be we could go straight to questions. He’s ready to take questions right off. Thank you. Please introduce yourselves and the organizations you represent before you pose questions. Yes, please.
Q: Jim Berger from the Washington Trade Daily. Your predecessor talked a lot about not jeopardizing the welfare of the rural poor in India, which you also discussed today. Yet you indicated that there’s a possibility of a compromise in the Doha round. I just wonder if you can explain if there’s any movement on the special safeguard mechanism, which was designed to protect rural poor farmers.
ANAND SHARMA: You see, there’s a very clear position. The Doha round is dedicated to developing countries. So development is at the core of the Doha process. Why the need was felt, both by the developed and the developing countries, has to be put in a historical perspective. It was to correct accepted distortions in global trade, which denied access and a level playing field to the developing countries. There are many issues, which were involved, and as the discussions progressed, other areas got covered.
But when it comes to the issues pertaining to the weak, the poor, the vulnerable, especially in the least developed countries or the developing countries – where perhaps two-third of the population is dependent on agriculture for subsistence – it is subsistence agriculture, not commercial agriculture. That distinction was recognized as the round developed.
So that is where we stand and I’m sure that those sensitivities have been taken onboard by everyone. If those sensitivities had not registered, we would not have moved forward and reached the stage where we did. And let me add here that it is also important for the world to remember that three-fourths of the agricultural workforce of the world comes from the poor countries.
Q: Thank you. Mr. Minister, Shobana Chandra from Bloomberg News. With exports declining for the past seven months, the government has already announced a bunch of measures to help out exporters. Do you agree that more relief measures are needed now, on top of the ones that have been announced? And also, do you have an estimate for how many jobs may have already been lost in the whole process? Thank you.
MR. SHARMA: As I said, the present economic crisis has affected countries across continents – some more adversely, some less adversely. Without quantifying in specific details, India may be one of the countries which is less adversely affected because of the sound fundamentals of its economy. That is the reason, perhaps, that why we have the FDI flows, which are encouraging. In the month of May itself, we have 2 billion (dollars) of FII money coming into India. It’s because of the stability and strength of the Indian economy, which is reassuring to the investors.
Having said that, it’s also very clear that we have been affected adversely, our exports have been. And there has been average shortfall, or decline, of over 30 percent, which we need to correct. And for that, one has to make our exports attractive and competitive, both – price-wise, too, because many of the exports, which have been impacted, are directly connected to labor-intensive industry, leading to loss of jobs. This is the duty of the political leadership and the government to correct that. We will do everything that is possible.
We have had detailed consultations with all the stakeholders – the chamber of commerce and industry – and with our officials. Based on that, I have discussed this matter with the Finance Minister, Pranab Mukherjee, and his team, only this Monday. We have given our recommendations and suggestions. I hope much of that will get reflected in the budget.
There were two stimulus packages which were earlier given. We want the continuation of some, including interest intervention, easy availability of credits, rollover of credits, duty drawbacks, DEPBs. Plus we will see what more can be done. At the same time, we will be having a real re-look at the foreign trade policy after the budget is presented. What more can be done beyond that will come in the foreign trade policy, which I will be unveiling in August.
Q: Chidanand Rajghatta, the Times of India. Minister, just to follow up on Jim’s question, there’s a sense that you and the current government are a little more flexible on Doha. I know your statement shows you intend to re-engage. So I’m wondering, is this because the government has returned with a stronger mandate and feels emboldened to re-engage? Or do you have any specific assurances, as you said, that you hope your sensitivities have registered with the developed countries – so, do you have assurances? Also, can you give us a sense – do you feel less burdened by being a Rajya Sabha member, whereas your predecessor –
MR. SHARMA: I think that’s not a fair question at all.
Q: Can I finish the question, sir?
MR. SHARMA: Yes. You’ve made an observation.
Q: I was asking. It was a question.
MR. SHARMA: Okay. Now let me come to that. The last one – the first. As somebody who’s been in public life for all his adult life, I’m rooted to Indian realities, sensitivities and national priorities no less, if not more. So it’s not a question of individuals. Nation-states’ policies are not determined by individuals, but by the leadership of the countries. Here, we have, in Prime Minister Dr. Manmohan Singh a leader with a vision, comprehension, understanding of what the global situation is, what India’s own priorities are.
Second, when it comes to our statement about resumption of the Doha process, India had never said that it should collapse. Yes, it hit a logjam – that is part of history. Now, either we dissect that and keep on analyzing and reanalyzing, or try to pick up from where we had reached and move it forward. A practical and correct approach is not to let it go waste what was invested over the years, but to accept the progress, which is substantial and significant. It’s like a marathon. It is a 25-miles marathon. The first 24 miles consumes a lot of energy. By the time you reach there, you are exhausted. And the last lap looks difficult and everybody wants to surge. But that’s where we are. We would like, now, to shore up the energy reserves and cover the last lap. There’s no change when it comes to issues and concerns.
When it comes to flexibility – your question – flexibility has to be there in the first place. If you are inflexible, you cannot walk and sit on a negotiating table for a global treaty, particularly this one, where three-fourths of the world was seeking correction of distortions, which were established and accepted.
So when you sit on that table, you have to be open. You have to be flexible. It’s not a question of who’s more flexible and who’s less flexible. You must not lose sight that it is to correct the infirmities. And particularly, for the developing countries. I don’t think that when positions are taken by nation-states, those positions are divorced from the larger picture. It would also be not fair to take governmental positions as individual positions. The logjam that we had hit is unfortunate. That was because of non-convergence on many issues.
And I would not like to go into specifics. Many of you who are sitting here are aware that non-convergence was not on one issue but on many issues. We hope that we’ll find a common meeting ground. As I have said to my interlocutors – both in Bali, at the Cairns Group meeting, yesterday and today – that we must try and harmonize the respective positions. That is important. You must understand, when countries come as sovereign nations to a negotiating table (they come) with different perspectives, positions, different levels of development, different level of challenges and aspirations, each country - developed and developing. Why do the negotiations have to take place? When the countries come together, the leadership of the countries agree that there is a need to correct the distortions and to harmonize the respective positions. And that can only be done by give and take to find the middle ground. And I see that; that is what we intend to do; that is what is achievable. If you remain rooted and frozen in the pre-negotiating position then no negotiation for global treaties is possible, what is the need of the hour is a rule-based multilateral trading regime which takes on board the developmental aspirations of the poor countries at the same time ensuring better access for all and that’s what we shall be striving for.
I’ve been speaking to my counterparts, ministers from other countries including USTR Ron Kirk whom I met in Bali and now again yesterday and ministers of other countries. We’ll be meeting again, I’ll be meeting with Peter Mandelson and the EU trade commissioner hopefully in London within a few days, and then we meet again by next week in Paris on the margins of the OECD ministerial. We must kick-start (the round). I would again make another addition here. The present dismal global economic scenario is a challenge and an opportunity. The countries who can play a role, who can define the roadmap must work with sincerity and openness to give a hope to millions across the globe. When there is a tendency to raise protectionist barriers that we will allow free movement of people, free movement of trade and services.
Q: This is Lalit Jha from Press Trust of India. You are the first cabinet minister to come to the U.S. after the formation of the new government. And the last two days you had a series of meetings with the Obama administration, with congressmen too. What is the sense you are getting, what is the focus of the new administration towards Indo-U.S. relationship? And what will be the main focus for the next five years?
MR. SHARMA: Well, I have no doubt in my mind that President Obama and his administration attach enormous significance in engaging India. Not only I find that there is a healthy respect for India, the values that it espouses, but also the vision and the policies of Prime Minister Dr. Manmohan Singh. Especially when it comes to the global crisis, given his sound understanding of the international economics, his counsel is much sought. India and America are two largest democracies on this planet: multiracial, multicultural, in every sense pluralistic. Our two countries can contribute a lot because we are constitutional democracies. And even when it comes to the roles which nations play, though it cannot be compartmentalized purely on trade and economics, is the history, the respect, the economics, and much more is related to that. But I found not only respect but hope and commitment. And I’m sure that both countries have the shared wish and commitment to take it forward.
MR. SHARMA: Well, in our opinion, protectionism is counterproductive for any country because protectionism at a time when we are talking of kick-starting the Doha development process would actually go against that spirit. Protectionism in any legal format would also subvert the multilateral processes. Protectionism, any protectionist barrier, would prolong the present economic recession and further delay any turnaround.
Q: Natasha Israni with Timesnow. Moving ahead on the line of protectionism, again, was this a topic of discussion specifically in your talks here in Washington, D.C., and also are there any specific steps that the Indian government is thinking of taking to counteract any negative effects of protectionism?
MR. SHARMA: Well, all the countries do eventually take action in policy measures to uphold the supreme national interests. But at the same time, India is committed to multilateralism; we are against any protectionist barriers. There are some issues which are there, which we have raised it with my interlocutors. And I’m sure that has registered.
Some of the areas that I feel that there is lack of comprehension or information because, particularly when you look at the services sector, it’s an important component when it forms a major component of the Indian exports. What is perhaps not fully appreciated, that our outflow of services is evenly matched by the inflow of services.
So that is what is important and through our friends in the media for me to communicate. Also when you have the Fortune 500 companies, a hundred of them have their R&D hubs in India, 220 of them source their software from India. And don’t forget, if India has such a huge IT industry, where does the hardware come from?
So that’s why any protectionist barrier is dangerous. Indian industry has brought, in five preceding years excluding the last one, over $106 billion in economic activity and created 300,000 jobs. IT industry alone has created – Indian IT industry – 250,000 jobs in America. So when it comes to H1-B visas, it’s only 24,000, one can stretch it to 30,000. But it is reciprocity which has to be acknowledged and appreciated. And that’s why I said any kind of protectionism will not only be counterproductive but deepen the recession, delay the recovery.
Q: If I can just do a follow-up on that, you said at the beginning that there are steps that every government would take to counteract any negative effects. Can you talk specifically with what kind of steps can the Indian government –
MR. SHARMA: Like we are taking in the form of stimulus to our industry, particularly labor intensive industry by giving them loans at reduced rates or credit rollovers. So that’s what any government would do; you have stimulus packages being rolled out by every country. But those are not protectionist. Those are protectionists in a different sense.
MODERATOR: The gentleman at the back.
Q: Mr. Minister, my name is Brian Yang, based at PharmAsia News. I have two questions related to pharmaceutical companies in India. One is regarding the EU, one is regarding the U.S. The EU is seizing the Indian generic drugs and the Indian government is thinking to take the issue to the World Trade Organization. What is your opinion on this?
MR. SHARMA: Can you expand more on that?
Q: On June the 12th, the Indian government is looking at the World Trade Organization, the WTO, to talk about the Europeans who are taking the Indian generic drugs, the shipment. You know, the Indian generic drugs, they are shipped to other countries including the European countries. And the EU has taken those drugs under control and the Indian government –
MR. SHARMA: So you are talking about the seizures in Netherlands.
Q: Yes, right. Thank you, exactly what I was talking about. Another question is about FDA, because FDA –
MR. SHARMA: No, let me first answer this. Now, when it comes to Indian generics, let me put this in a correct perspective. The arrival of Indian generics changed the pharmaceutical discourse globally. Before the arrival of the Indian generics, there was a suffocating stranglehold of multinational cartels particularly on anti-retrovirals and lifesaving drugs which were beyond the reach of poor countries.
This issue was ethical, not commercial. It was first fought on the soil of Africa, in South Africa. When the issue of Indian anti-retrovirals came up, and at that time the cost of ARVs per person per annum was between 13,000 to $15,000. It was brought down in one stroke to $1200; today it is in the vicinity of $600. That is a huge contribution.
At that time, this was litigated, the multinational cartels went to the court in South Africa and they lost. So let’s put in a proper perspective: We know that there have been many attempts to discredit Indian generics because they have posed a larger challenge. I put it more in the ethical perspective than the commercial one. But even if you have to look at the commerce, then commerce should be favoring the poor and the vulnerable.
I come from a country where the father of my country had said two things among the seven sins which he listed way back in 1929. And that was: science without humanity and commerce without morality. So you have to be very clear – this entire debate or the questions which are raised on the seizures are not on the validity or the authenticity; it’s pure commercial considerations.
And let me go a step forward. I know that I am going to touch the hornet’s nest. Recently, when there were appeals worldwide because of the pandemic – the swine flu having been upgraded, unfortunately, to category six – with those who have the vaccine, the Tamiflu, to make it available on concessional rate – without my naming it; you name them – these are the same forces, same multinationals who have refused to lower the price. It is as recent as day before yesterday. Now, let the world judge.
Q: Sam Gilston with Washington Tariff and Trade Letter. If positions in the Doha round are a matter of national positions rather than individuals or personalities and you didn’t indicate that there was any new mandate from the election from the Singh government in the Doha round, why should we expect any different change in the outcome of these talks than we’ve seen for the last seven years? There was no change then, at all, that we can see besides the very fond comments that Mr. Kirk had about you yesterday.
MR. SHARMA: Let me put it this way: Did we fight elections in America or in India on Doha round?
MR. SHARMA: No, I’m afraid not. Neither President Obama nor Prime Minister Manmohan Singh – no, we didn’t. Sorry but the non-convergence was not linked either to our elections or to American elections. To be fair to both, both had issues, and other countries, too, had issues. Why you can have the hope is because you have strong governments in position. My prime minister has a very clear commitment that this round being dedicated to development must be taken to its successful conclusion.
That’s the mandate which I have from my Prime Minister, who feels that in the present economic crisis which the world is facing, this will be a positive message for global trade barriers to be broken down further and global trade to move, which will help economies across the globe. And I’m sure that President Obama wishes the same and that’s the feeling what I got from Ron Kirk. You see, when political leaders discuss issues, we would paint the larger canvas, not be bogged down by smaller details. If you have the larger picture firmly in mind and you are committed to take it forward, the details can always be filled in. I’m optimistic.
Q: Just a follow-up: Did Mr. Singh not have that position in July – last July? Did Mr. Singh not have that commitment to completion of the round last July when they were close to an agreement?
MR. SHARMA: India never lacked that commitment. I said there was non-convergence on many issues, not only confined to India.
Q: Thank you, sir. Raghubir Goyal for India Globe and Asia Today. Mr. Minister, two quick questions: one, as far as trade between the two countries – last year we had some problems like in November, December during the Bush administration –
MR. SHARMA: Which paper do you represent?
Q: India Globe and Asia Today.
Q: India Globe and Asia Today. There were some problems last year between USTR during the Bush administration and India because they were saying that India is not fair as far as trade between the two countries. What I’m asking is – also there was a mango diplomacy that time. One, if we are going to see again those mangoes in the U.S. markets, which I presented to last year to President Bush and also this year to President Obama –
MR. SHARMA: Okay, okay.
Q: And second, sir, as far as creating jobs and economics are concerned, as for nuclear issues concerns, that you think would bring more jobs in both countries and will bring more economics, where is this issue in our standing as far as between the two countries because one paper which was –
MR. SHARMA: Learn to ask crisper questions. I have understood your question.
Q: Yes, sir. Thank you.
MR. SHARMA: First, mango diplomacy must continue; it’s always sweet. (Laughter.) And this time the crop is small but I hope it continues. Mangoes of different varieties come in alternate seasons. Secondly, when it comes to trade, I would refrain firmly from commenting on personalities or specific periods.
Thirdly, nuclear commerce will generate employment in both the countries – more in America. More revenue for this country. I’m sure the U.S. administration, the former president and the present one recognize it with clarity. Engaging with India in nuclear commerce is not only sound economics but a sound investment in the future of humankind addressing the twin issues of energy security and climate change.
Q: My name is Hasmukh Shah.
MR. SHARMA: I know you.
Q: Thank you, sir. Your visit over here has created a lot of optimism among the U.S. companies, because yesterday –
MR. SHARMA: I’m happy to hear that. I hope in the U.S. government, too.
Q: Although – but they have – like India, they have their own political compunction, as you know, especially outsourcing. Now, there are two major issues between the two countries bilaterally: One is outsourcing, another is the so-called trade and tariff barriers in India and free entry into the agriculture sector – the U.S. and developed countries wants to enter it. But you have expressed optimism that despite all those things, the Doha round of talks must succeed. So can you see our perception about this?
MR. SHARMA: You see, bilaterally, our economic relations are very satisfactory and sound and that exchange will continue. We’ll look at other areas where we can expand. When it comes to multilateral trading regimes, those issues are not addressed bilaterally. We have – we exchange notes, we take each others’ sensitivities on board. When it comes to outsourcing, it would be, to my mind, not the right thing to look at it negatively. As I mentioned, that outsourcing has generated more employment in America itself.
Indian industry, Indian FDI in America is more than America’s FDI in India. Indian investments are more. Globally, if you look at acquisitions and mergers in the last one decade, it is India which takes the lead. In America, if we have taken 24,000, 30,000 to put it maximum, H-1B visas, then we have also created huge employment. Things have to be put in a proper perspective and you in the media should help in communicating the correct picture because sometimes we in politics do not get it.
MR. SHARMA: Last one.
Q: Thanks so much. You talked about, you know, possibly wanting continuation of some stimulus measures for exporters. Would you say it’s too early yet to say that the worst of the export declines is over for India? Or – are you getting any sense at all? Industrial production we saw a slight improvement. What about just the –
MR. SHARMA: I’ll put it very honestly: The green shoots which were being talked about in March have shriveled, globally. So there is no confirmation as to when it gets bottomed out. In India, there is an increase in demand of the capital goods and our economy’s again on a positive trajectory. All the projections for Indian economy have been updated, not by India but by the international agencies. We’ve recorded 6.7 percent as the figures came out last month. We will only go up. I’m confident that we will cross 7 percent threshold soon and will end the year at 8 percent so – which is good. Prime minister hopes by 2011 we’ll again take it back to 9 percent-plus.
One factor has been the growth in the domestic demand, primarily because of the increased expenditure. It’s not a knee-jerk reaction to the global economic crisis. There are many national initiatives in place, which have only been expanded where public spending has been there; that has led to a spurt in growth, particularly for capital goods. We have lost jobs in exports. We have lost foreign exchange earnings in exports. I’m not in a position to make any forecast as to when the present recession will bottom out in major markets, the preferred and the traditional destinations for Indian exporters.
We will continue to hope that these markets get revived and we are able to expand our exports to these markets, particularly in those sectors which are important, labor-intensive where we are critically engaged, not only IT. I’m talking of those concerning really the common people in India – the leather exports, the handicrafts, the garments, the textiles – we would look at that. At the same time, we are also clear of the need for market diversifications.
There are markets as well in the world where we are engaged, like any country is, engaged globally, which are doing well and we would be looking at every possible measures to give us stimulus and to revive exports. But one thing we are very clear: There must be a distinction between stimulus as an incentive or a legislative protectionist measure as a stimulus. That must not be confused.
MODERATOR: Thank you. Thank you so much. Thank you, Minister.