Remarks to the Federation of Indian Chambers of Commerce and Industry

New Delhi, India
April 21, 2004

Thank you, Dr. Mitra for your warm welcome, and good afternoon, ladies and gentlemen. I'm grateful for the opportunity to meet with India's business leaders and members of the press at FICCI [FICK-ee].

Almost 30 years ago, the U.S. Chamber of Commerce and the Federation of Indian Chambers of Commerce and Industry were invited to form an association that would bring our business communities together under the aegis of the U.S.-India Commission's Subcommission on Economic and Commercial Affairs.

The timing wasn't very auspicious. Our two governments weren't on good terms, and for most of the next two decades, did not work together – and often did not even speak to each other. And when they did speak, things tended to get worse!

But we in industry persevered and in the post-1991 period of economic reform, we have begun to work together with much greater frequency, and with much greater effect.

Today we have a major announcement to make about a new joint initiative, which I am very proud to be a part of, and which I will describe in a moment.

But first, let me explain why I am here:

I know that I have come to India at what must seem an awkward time. India is in the midst of national elections. We are also in the midst of a prolonged and fiercely contested national election campaign in the United States.

I am proud to be in India at this time and to be witness to the world's largest, regular democratic mobilization. And I am grateful to everyone here who is making it possible for me to learn more about this great country despite the press of other urgent business.

I am carrying three basic messages:

First, I think it is important that the voice of American business be heard on the matter of global sourcing. We support a balanced approach to global sourcing, and we are defending it to the hilt.

Second, I have come to explore how we can work together to further the cause of open markets and expanded trade – both in our bilateral relationship and on the global stage.

I have already announced a new initiative to help U.S. businesses realize the opportunities created by India's promising liberalization of its markets. American companies must now seize the initiative and put more effort into entering this market – and we want to help them do that.

It is also time for our two great nations to move beyond process and chart a results-oriented course when it comes to the Doha Round.

While the press has had a field day highlighting our two countries' differences, particularly after Cancun, I am convinced that beneath it all our two countries share similar concerns and also a commitment to pragmatism.

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.

Third, I have come to talk with my Indian counterparts about how we can work together to fight the counterfeiting and piracy of the knowledge-based products that we both produce.

You see, I think India has a unique opportunity to boldly establish itself as a reform model in confronting the challenges of protecting intellectual property in an economic era where intellectual property counts for everything.

Outsourcing and Knowledge Trade

Now, what I'd like to do in my remaining time is make a few more comments about worldwide sourcing – since that is the headline topic these days. Then I'll turn to the serious challenge of global piracy and counterfeiting.

The organization that I lead has long stood for the free movement of ideas, of goods and services, of capital and of people.

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 moved due to outsourcing, that insourcing, along with America's openness to the world economy, creates many, many more times the jobs than are leaving.

A good illustration is what happened in the American IT industry.

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.

Beyond Sourcing – New Opportunities

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.

IT and Business Process Outsourcing services are not knowledge-based products and services that India and the United States trade.

In 2000-01, FICCI and the U.S.-India Business Council started a significant undertaking, the first of its kind, to examine the potential for bilateral collaboration in all the knowledge based industries, and to identify key regulatory and policy hurdles to developing that potential.

The result of this undertaking was a report with more than 120 specific policy recommendations on subjects ranging from telecommunications policy to financial services liberalization. More than half of these recommendations were implemented, I am happy to report, within one year of the report's release.

In particular, the report analyzed two areas of special potential for bilateral exchange – biotechnology and entertainment.

What the report recognized is that there is a wide range of potential cooperation where Indian and U.S. firms can share processes of innovation, invention, discovery, testing, manufacturing, marketing, and distribution of technology-based products and services.

Fighting IP Theft and Protecting Knowledge Trade

Today we are realizing many of these opportunities but there is a cloud on the horizon – for with the growth of knowledge trade has come new challenges in protecting it. We are also finding that the technology can be misused to easily, cheaply and more realistically reproduce counterfeit products of almost any kind.

In fact, since access to complex industrial technology is no longer a hurdle for the criminal element of society, the growth of piracy and counterfeiting has exploded.

As a result, counterfeit products have become cheaper, harder to identify and ultimately more dangerous. No product or category is safe. Every day our economies and businesses lose economic opportunity from the trade of everything from fake batteries, to razor blades, to automotive parts – as well as movies, music and software. These are not victimless crimes – but rather crimes that put our economies, businesses and the health of our consumers at risk.

Stealing and reproducing digitized media or information is particularly easy – and it will require new forms of safeguard.

We need to make sure that the rules for this kind of trade are as well-defined as those governing the shipment of tangible objects. We can do this by working together to revive the stalled services trade negotiations at WTO – GATS — and we should explore how India and the U.S can become a model for the world in ensuring the integrity of our own bilateral services trade.

We can, and should, go farther to make the information flows between India and the U.S. the safest on earth by agreeing to establish within each country the world's most effective (and reasonable) standards for privacy, data and cyber security, and the continuity of business operations. We should establish strong legal protections and enforcement to turn agreements into safeguards.

Furthermore I believe the time has come for India and the United States to pool its energies, resources and commitment and dedicate them to the fight against global piracy and counterfeiting.

Neither counterfeiting nor intellectual property piracy is a new phenomenon. In fact the growth in the trade of illegitimate goods over the past 20 years has been astounding.

In 1982, it was estimated that this trade drained $5.5 billion from the global economy. By 1996, this figure had jumped to an estimated $200 billion. And by 2003, estimates range from $450 billion to $500 billion.

Various organizations, including Interpol, estimate that the trade in counterfeit and illicit goods ranges between 6 and 9 percent of all current world trade, with volume rising sharply.

FICCI has done a careful study of the impact of piracy on India's own film and music industries and found that 55 percent of expected earnings from film, and 40 percent of revenue from sales of music were lost to piracy.

Those are staggering figures, and it explains why Dr. Mitra and his team feels a strongly as we do at the Chamber about the need to combat this form of crime.

What we both see is that intellectual property theft is a major threat to the well-being of our economies.

And that is why I am delighted to announce that the U.S. Chamber of Commerce will join forces with a national initiative in India spearheaded by FICCI to combat piracy and counterfeiting. (A fact sheet/handout with details is being circulated.)

In essence, we have agreed to:

o Share information about the activity we are undertaking in each country, emerging issues that we see, and successes and challenges that we experience

o Contribute to each other's studies and analyses of the impact of piracy at home and abroad

o Share analyses of legislation, regulations and other measures taken or proposed to combat piracy and counterfeiting in each country

o Organize a major joint conference with representatives of industry, law enforcement, the courts, and both national and state legislatures

o Organize joint public education programs in each country to highlight the costs and risks of counterfeiting and piracy

Finally, I want to call attention to something that isn't often recognized – namely, that Indian firms share with their American counterparts some very important interests on IPR.

A strong IPR and information security regime should be viewed as the critical enabling condition for global knowledge trade.

Without it, the transaction costs of monitoring and enforcing contracts are just too high and the potential for developing cross-border R&D and other high-tech activity in India will be suppressed.

By the same token, the existence of a robust IPR regime in both countries is also the surest safeguard of a level playing field for India and other countries that have often found themselves disadvantaged when it comes to defending their intellectual property rights in far-away developed country markets.

THE LEADERSHIP ROLE OF BUSINESS

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. Together, we can fight the scourge of terrorism and promote stability and world peace. And as I have emphasized here today, we must work together to stop piracy, counterfeiting and the theft of intellectual property.

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 FICCI to achieve the potential of what can be an historic partnership between India and the United States.

Thank you very much.