Remarks to the Confederation of Indian Industry

New Delhi, India
April 20, 2004

Thank you, Mr. Munjal [MUN-jall] for that warm welcome, and good afternoon, ladies and gentlemen. I'm grateful to CII for this opportunity to meet with Indian business leaders and members of the press.

More than a decade ago, CII made a decision to invest heavily in the U.S.-India relationship by establishing an office in Washington, D.C.

Its presence there provides greater awareness among our business leaders, members of Congress, and the Administration of the tremendous opportunities in India—which are growing by the day.

India has taken a number of difficult steps to become more competitive—a steady and dramatic reduction in tariffs…comprehensive regulatory reform…the opening up of many sectors, including telecom, pharmaceuticals, IT, insurance and banking…and increased investment in infrastructure, especially roads and ports.

The result of these actions has been one of the most compelling and dramatic economic turnarounds in recent history.

While only a decade or so ago India remained largely isolated from the global economy, today its economy is growing by double digits and rapidly attracting new trading and investment partners, many of them U.S. businesses.

CII has played a major role in these developments. Its quiet, back-channel support has helped both countries to overcome mutual concerns and work better together on issues such as biotechnology and other high-tech areas, commercial defense, financial services, and bilateral and multilateral trade – where we have had some serious differences.

We all know much work remains to be done to open markets and level the playing field, but it's also important that we celebrate successes – for they help light the way to future progress.

The purpose of my trip and my appearance here today is to offer some ideas and listen to yours on how we can rise to the next level – to help each other keep our countries on the right path to reform, and to advance the U.S.-India commercial relationship to where it has never gone before.

Let me begin with an issue that is at the core of our relationship, and that is global sourcing.

Let there be no mistake about where the Chamber and most of the American business community stands on global sourcing: We believe it can be good for the American economy and American workers.

That is why we are leading the fight in the United States against isolationist measures that deny our companies the freedom and flexibility to improve themselves, to increase their productivity and efficiency, and to better compete all around the world.

However, we are in a political season in the United States. I don't have to tell any of you here today what that means!

Some politicians, aided by some in the media, have conjured up fears among the public that massive amounts of American jobs are moving out of our country, and that both sourcing and trade are driving down the living standards of our people.

In fact, after an extensive investigation, we discovered that no one really knows for sure how many service jobs and have been moved to India and other countries.

But we do know it makes good sense for many companies, who can then turn their attention to investing in new products and creating new and better jobs at home. It can strengthen companies' bottom lines, boost earnings and lift stock prices – which helps the more than 50 percent of American households who now own stocks.

·And we know that no matter how many jobs are moving due to outsourcing, that insourcing, along with America's openness to the world economy, creates many, many more times the jobs than are leaving.

Let me illustrate by telling a story that is also a parable for our times. It's about fly fishing.

In the state of Montana, the fly fishing industry appeared to be in trouble when foreign competitors started selling cheaper flies. Soon, just about everyone who tied flies was wiped out, and everyone thought the entire industry would follow.

But instead, the industry boomed. More people started to fly fish because the equipment was more affordable.

After that, some people who had lost their jobs are now making specialty products for all the new fans of the sport —and fetching a very high price. And others went on to bigger and better things, like setting up tourism businesses to run fly fishing tours.

The same thing has happened in information technology.

The outsourcing of computer hardware manufacturing during the last decade lowered the price of IT. As a result, its infusion throughout our economy and society increased rapidly. That made us more productive and it created millions of new jobs in computer services. And the same thing is happening now with the sourcing of some IT service jobs.

This is the message we are working hard to spread in the United States. And I believe we are making progress.

Over 80 bills have been introduced in some 30 states and Congress to punish companies who source to India and elsewhere. But as reported in the Wall Street Journal just last Friday, virtually all of them have been stopped thanks to a strong coalition led by the U.S. Chamber.

Let me assure you that we will continue to fight for balanced policies that reject isolationism and leave our companies free to grow stronger and more successful by trading and sourcing around the world. This in turn will help Indian companies and spur the growth of our commercial partnership.

But there is more we must do. Allow me to briefly highlight four issues:

First, we need to recognize that – because most of what we trade is in the form of electronic bits moving at the speed of light – we need new rules and institutions.

We need to assure that the rules for knowledge-based trade are as well defined as those governing the shipment of textiles or car parts.

We also need to make sure that other forms of movement – of people, of money, and of materials that – are made as free as the flow of bits and bytes.

To this end, we need to work together to revive the stalled trade-in-services negotiations at WTO – GATS – and India and United States should strive to set a good example in our own bilateral services trade.

Second, we need to make sure that people whose vital information is passed around the globe enjoy adequate protections and rights.

We can and should go further to safeguard information flows between the U.S. and India by agreeing to establish the world's highest standards for privacy, data and cyber security, and continuity of business operations. We should also establish strong legal protections and institutions to enforce these commitments.

This is a complex task, and I see no simple catch-all solution. But I am already impressed by the effective high-level cooperation that is already developing between American business associations and companies and their Indian counterparts.

Third, both countries have recognized the tremendous economic losses and harmful effects on consumer health and safety that come from the large and growing phenomenon of global piracy and counterfeiting. An estimated 9% of world trade is in counterfeit goods.

Independently, India and the United States have launched separate anti-intellectual property theft and initiatives with parallel and complementary objectives. But both have recognized that the problem is global, and no country can successfully combat it in isolation.

One of the major goals of my trip here this week is to find new partners and forge new alliances in what must be a global effort with strong worldwide private sector leadership.

Fourth, as we pioneer new forms of collaboration in research and development in areas such as biotechnology and pharmaceuticals, chemicals, and engineering – even extending to defense – we need to develop stronger safeguards against the transfer of sensitive technologies to third parties.

This, I believe, is a matter of mutual concern for businesses as well as governments, and we applaud the recent steps taken by Prime Minister Vajpayee and President Bush earlier this year to better protect sensitive information.

While offshore partnerships and knowledge-based trade are redefining the U.S.-Indian relationship, we must continue to develop it on other fronts.

Despite many years of frustration, more traditional forms of U.S.-India bilateral trade are beginning to show signs of achieving their full potential.

Last year, U.S. exports to India grew by 22 percent, according to the latest figures released by the U.S. government.

At the same time, the breadth of U.S.-India trade is also growing, with small and medium size companies making a strong showing.

What really impresses me is that with leadership from the U.S. Senior Foreign Commercial Officer, John Peters, U.S. exports by small and medium size firms to India are on verge of setting world records. I'm told the U.S. has never sold more goods and services produced by small and medium size firms to any other country at any time.

This is really important not only commercially, but politically as well. It is in our mutual interest to build a much broader constituency for U.S.-India trade.

With the dollar depreciating against the rupee, India flush with a large and growing stockpile of reserves, and Indian demand recovering to all time highs, the timing is good for a major effort by American companies to compete in Indian markets.

We need to recognize that, for a variety of historical reasons, American businesses have had little exposure to India and have preferred to follow the well-worn path to more familiar overseas markets.

But, as I've illustrated, that's changing. U.S. businesses are doing their homework and learning to become as flexible and creative in India as they are everywhere else.

They are taking advantage of government resources that promote trade and investment opportunities.

But they also need to work with private companies and institutions in India to more effectively share information, identify opportunities, learn from best practices, and build business networks.

To accomplish this, I am pleased to announce that CII and the U.S. Chamber of Commerce, working with the Chamber's Trade Roots national outreach program and the U.S.-India Business Council, have agreed to organize a special U.S.-India Trade Development Partnership.

Our goal is to leverage existing government resources in both countries through public-private cooperation to spur intensified trade cooperation – that means close business deals! – between the two countries.

In a twelve-month period, we hope to organize sufficient activity in the form of trade missions, videoconferences and seminars, shared websites, and other network-building devices to measurably accelerate bilateral trade cooperation. Look for lots more information in the coming weeks.

It is our hope that as India and the U.S. develop a stronger bilateral relationship, we will also work more closely to resurrect the stalled the WTO Doha talks.

India's perspective was critical in shaping the Doha Agenda, and it will be vital to the outcome of negotiations.

While the media has highlighted differences between India and the U.S. on Doha – and there are indeed some differences — I am convinced that we can complete this round if we just listen to each other a little more carefully.

In the all-important discussions on agriculture, and specifically on the matter of subsidies, we need to start talking less about what's wrong with each country's negotiating position, and start talking about what is required to move ahead.

India, as a leading member of the G-20 and as the historical leader of the developing world, has a special role to play in bridging the old North-South divide.

But we also need to be realistic and recognize that reform is an on-going, long-term process while negotiations are here and now. We can raise living standards across-the-board and around the world by getting beyond process to matters of substance, and by successfully completing the Doha round.

In conclusion, let me say that all of us in the business community have a vital role to play in developing our bilateral relationship on all fronts.

I believe we have arrived at a moment of great opportunity and that our countries have the potential to forge one of the truly great partnerships in modern history. A partnership that can change the world for the better – and not only in matters of trade and technology and business efficiency.

Together we can fight deadly diseases, free millions from poverty, and free millions more through the liberating power of basic literacy and advanced education. Together, we can stop the proliferation of dangerous weapons and illicit counterfeit products. Together, we can fight the scourge of terrorism and promote stability and world peace.

We are two great nations with great destinies and important responsibilities. Fulfilling our tremendous potential at this moment of opportunity is not just a challenge for our governments. It is a challenge that belongs to us – the business leaders of both our nations. The U.S. Chamber of Commerce stands ready to work closely with the Confederation of Indian Industries to achieve the potential of what can be an historic partnership between India and the United States.

Thank you very much.