[Congressional Record Volume 140, Number 70 (Wednesday, June 8, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: June 8, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
 THE VISIT OF INDIAN PRIME MINISTER RAO AND THE FUTURE OF INDO-UNITED 
                         STATES TRADE RELATIONS

  Mr. PRESSLER. Mr. President, during the recent visit to Washington by 
Indian Prime Minister Narasimha Rao, I had the honor and pleasure of 
attending several meetings and functions with both the Prime Minister 
and a variety of members of the delegation accompanying him. As my 
colleagues know, I have a longstanding interest in South Asia. I often 
have risen to discuss my concerns regarding U.S. policy in that region 
of the world, especially as it relates to nuclear nonproliferation. 
That is not my purpose today. Rather, I rise to address the issue of 
trade relations between our two countries.
  I am gratified Prime Minister Rao reaffirmed India's commitment to 
expanding trading opportunities in his speech before a joint session of 
Congress. I could not agree more with the Prime Minister's statement 
that: ``In shaping our history for the next century, we must look ahead 
to greater trade between nations.'' During the long years of the cold 
war, relations between our two nations often were badly strained. I 
hope and believe that is changing. The signs are, for the most part, 
positive.
  Under the leadership of Prime Minister Rao, India has made progress 
in foreign investment, privatization, tariffs, and deregulation of 
Government controls. Prime Minister Rao has changed radically India's 
economy, moving it from a centrally planned system to one of the 
world's largest emerging free markets. Why is this important? It is 
important because the Department of Commerce estimates that in the next 
20 years three-fourths of the world's trade will occur in developing 
countries like India. Indeed, the United States has become India's 
biggest trading partner since Prime Minister Rao came to power in 1991.
  During the Prime Minister's visit, I also had the opportunity to meet 
with a delegation of Indian business leaders. Over the years, I have 
had many such meetings both here and during my visits to India. I find 
them to be extremely useful and most educational. However, such 
meetings also illustrate that despite my optimism regarding future 
Indo-United States trade relations, much remains to be done on both 
sides.
  The Indian business leaders with whom I met were concerned with 
numerous issues. I would like to take a few minutes to highlight 
several problems they raised. First, I was told the United States 
should give more credit to India for its work in correcting a 
longstanding problem--the protection of intellectual property rights as 
they relate to computer software. Historically, this has been a 
significant obstacle. However, in May India's Parliament enacted new 
copyright laws designed to combat his situation and bring that 
country's laws on par with the developed world.
  Under the new law, software pirates can be imprisoned for up to 3 
years and fined between $1,600 and $6,400. In addition, the new law 
defines what constitutes illegal copying of software. Finally, the law 
attempts to better clarify who will be considered the author of 
software and what protections attach to authorship. I also understand 
India's computer industry has created the Indian Federation Against 
Software Theft [InFAST]. InFAST will work to curb piracy and take 
pirates to court.
  Another issue raised in my meeting with these business leaders also 
relates to the computer software industry. The United States is India's 
primary market for software exports. Indeed, we account for more than 
50 percent of that country's software trade. As a result, hundreds of 
Indian software professionals come to the United States each year to 
work in our computer companies for short periods. The delegation told 
me that a main reason Indian workers travel to this country is the 
growth of joint ventures and subsidiaries between the two countries. 
The Indians are concerned that modifications in U.S. law could change 
all that. In the process, they argue, the jobs created for American 
workers by these joint ventures and subsidiaries would be lost.
  What concerns them? Authorized under the Immigration Act of 1990, the 
H-1B visa program limits to 65,000 per year the number of temporary 
visas that may be issued for skilled workers. The law also requires 
that firms hiring these temporary employees take steps to ensure they 
do not displace U.S. workers. Last fall, the Department of Labor 
proposed changes to the regulations implementing this law. The Indians 
charge that the proposed changes, at least partially, are born out of 
problems faced by the computer industry in California--a region of the 
country facing a severe recession and the State in which most Indian 
software professionals are employed. They also argue that charges of 
tens of thousands of Indians working on H-1B visas in the computer 
industry are seriously overstated. Indeed, Indian officials cite State 
Department numbers reporting the issuance of only 1,100 such visas in 
1992.
  The business leaders also are concerned over what they see as 
disparate treatment regarding U.S. exports of high-speed computers. In 
February, the Clinton administration announced the lifting of most of 
the controls governing the export of these computers. The Commerce 
Department proclaimed potential new sales of $30 billion per year. 
However, the Indian business community views the new rules as 
discriminatory. Under the regulation, the Commerce Department raised 
the permissible eligibility level for the licensing of sales of digital 
computers to most Western nations from 195 million theoretical 
operations per second [MTOPS] to 1,000 MTOPS. For countries on the 
Department's nuclear non-proliferation special country list--a list 
that includes India among numerous other countries--the limit was 
raised only to 500 MTOPS. The business leaders with whom I met 
reiterated a point made by Prime Minister Rao in his address to 
Congress:

       Export controls on technology, while once a useful means 
     for controlling weapons technology, now hinder developing 
     countries in their efforts to improve the lives of their 
     people. Much of what is termed as weapons technology in fact 
     has vital applications in a modern civilian society. Many 
     special materials and complicated computer processors found 
     in missile control systems are also found in hospital 
     intensive care units and global telecommunications systems.

  The final concern I wish to address relates to the way in which these 
Indian leaders perceive how the United States conducts its overall 
trade negotiations. They believe progress in trade is hampered by the 
forum in which the United States chooses to send its political signals. 
Specifically, such signals all too often are made public in the media, 
rather than through quieter--and they think more effective--diplomatic 
means. The examples raised included the visa issue I discussed earlier, 
as well as the issues of countervailing duties and ``Special 301'' 
sanctions. Were they saying the United States should not issue warnings 
when problems arise? No. The argument was that too many of our trade 
difficulties are negotiated via newspapers rather than diplomatic 
pouch. Public posturing rapidly puts both sides on the defensive, 
making compromise more difficult.
  Mr. President, I appreciate and understand the concerns raised by the 
Indian Government and business community. Of course, as in any 
association, there are two sides to the story. India has achieved 
significant and major reforms. However, when I discuss our relationship 
with officials in the office of the U.S. Trade Representative, they are 
quick to point out that major concerns exist from the U.S. perspective 
as well. I would like to discuss several of the more significant issues 
the United States would like to see addressed by India.
  Protectionist policies close markets and destroy jobs. As ranking 
member of the Senate Committee on Small Business and as a member of the 
committees on Foreign Relations and Commerce, I am fully aware of how 
tariffs create costly barriers to competitive markets. Tariffs 
protecting India's domestic markets continue as an unfortunate 
impediment to international trade. For 3 years, the United States has 
been negotiating actively with India on textile and apparel market 
access. Unfortunately, progress has been slow. Tariffs on textile 
imports to India are as high as 110 percent--a burden hampering 
bilateral trade achievements. The Indian Government has agreed to 
reduce its import textile tariffs to 40 percent over a 10-year period. 
However, there is concern that the 10-year phase-in period is too long 
and the resulting tariff of 40 percent is still too high for productive 
trade.
  Since the beginning of the Uruguay round of GATT negotiations in 
1986, India's exports of textiles and clothing to the United States 
have nearly tripled. At the same time, the United States is prohibited 
from selling or even trying to sell in India's market. For freer--and 
fairer--trade, it is absolutely critical that the United States 
concludes textile and apparel market access negotiations with India. It 
is a simple reality of the new worldwide trading system that each 
country must be prepared for competition.
  Concerns also remain about royalties lost to patent and copyright 
infringements. Revenue losses to U.S. technology and entertainment 
industries are substantial. American pharmaceutical manufacturers alone 
estimate that $400 million annually is lost to piracy. Understandably, 
India is concerned about the high costs of technology transfers 
associated with patent protection. In addition, export controls on dual 
use technology can hinder the efforts of developing countries that need 
such technologies to improve their standard of living. I applaud the 
actions of the Indian Government in enacting tougher copyright 
protection laws. However, only time will tell how effective these new 
laws will prove to be. I am afraid that if respect for patent and 
copyright protection is not a priority for India, the United States 
will have no choice but to continue to designate India as a ``priority 
foreign country'' under the ``Special 301'' provision of the 1988 Trade 
Act. For our own benefit, and that of India, I hope our two countries 
can work together and build on the recent progress made by the India 
Parliament in passing its new copyright law. If vigorously enforced, it 
would serve to protect the industries of both countries.
  The third, and final area of concern I would like to mention is that 
of India's insurance industry--currently a virtually closed market. 
Ideally, India will open its monopolistic insurance market to allow 
access for foreign insurance providers. However, I am aware that in 
return for allowing the United States increased access to its insurance 
market, India would like the United States to loosen its temporary visa 
restrictions. I want to stress again that only through a combined 
effort will our two countries be able to resolve our conflicts and move 
toward the system of trade we both desire.
  Mr. President, India will be an important economic contributor in the 
next century. We now have the opportunity to form positive partnerships 
based on mutual interests. I agree with Prime Minister Rao's statement 
to Congress when he said, ``Indo-U.S. relations are on the threshold of 
a bold new era * * * We have seen unprecedented cooperation * * * We 
share common interests. * * *''
  I am certain the United States can resolve its differences with 
India. I am equally confident that the future of our trading and 
political relations with India will be bright. As a trading partner, 
India holds tremendous potential. With patience and a willingness to 
compromise on both sides, I believe an extraordinary and mutually 
beneficial alliance can be forged between our two great democracies.

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