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Transcript of the Press Conference of Commerce and Industry Minister Mr. Kamal Nath at the Embassy of India, Washington, DC

Washington, DC
June 28, 2007 

Mr. Rahul Chhabra : Good evening, ladies and gentlemen. Welcome to this press briefing at the Embassy of India. We have Minister of Commerce and Industry, Mr. Kamal Nath, with us here today along with Ambassador Ronen Sen. Just to give you a flavor, Mr. Nath arrived yesterday. Some of you were there at his interactions at the USIBC. Yesterday, he spent his time – he met USTR. This morning, he has been at the Carnegie Foundation.

Mr. Ronen Sen: (Off mike, inaudible) -- with a bilateral meeting with Susan Schwab. Apart from that, now, we will just meet with Bob Zoellick who, as you know, is taking over as president of the World Bank. And then, also with Treasury Secretary Hank Paulson and Agriculture Secretary Mike Johanns. And there is one more meeting – (inaudible, off mike) – yeah, Hank Paulson, I mentioned and Mike Johanns. So these will be the meetings that took place or are going to , so it’s been very crowded. I think rather than open with a statement, the minister would like to say –

Mr. Kamal Nath: Yeah, but thank you for being here. And as the Ambassador said, in what – 30 hours – I would have met all these people; by the time I leave at 6:00 in the evening. And this is because of the continuing effort, India and United States, are making to engage more with each other commercially; with the warm relations we have, to give it a commercial component – commercial content. So I am here and I had meetings yesterday with – three meetings with Susan Schwab – one bilateral, one at the USIBC, and then at dinner. This was in addition to the four meetings that I’ve had in the last three weeks with her. So we have looked at ways; we’ve tried to assess why there were divergences; and tried to look at how to take the process forward. India is committed to the success of the multilateral system – of the Doha round, and we want to see a strong, multilateral trading system. As we globalize, this is very important.

This morning - I see some familiar faces here who were at the Carnegie Foundation - you heard what I said there, so I don’t have to be repetitive, but we are keen, and we will – India will continue to push forward- by whatever process : the multilateral process or the enlarged group of countries – to ensure that we move forward in this round.

We have very healthy trade relations with the United States. They are going up every year, and we are hoping that by the year – by 2009 we’d be able to double our trade. We want to double our trade with the United States by the year 2009. And United States is India’s largest trading partner, accounting for 16.8 percent of India’s exports and about 6.3 percent of India’s imports in 2005-2006.

Of course we are not only looking at enlarging, putting more weight into our trade, increasing the mass of our trade basket, but also adding more contents in it. So that is briefly an account of the 30 hours I’ll be spending here – 36 hours I’ll be spending – less than 36 hours which I’ll be spending. Three secretaries - of agriculture, commerce, treasury – as well the president-designate who takes over - I think, on Sunday or Monday – the World Bank. So it has been very useful and very fruitful.

MR. Rahul Chhabra : Questions? Please introduce yourselves and then ask your question.

Q: My name is Aziz Hanifa with India Abroad. For all of the bonhomie you have with Susan Schwab, and you guys seem to be getting along fine and dandy, the Doha round tensions seem to be even - sort of in a way overwhelming the nuclear talks, and we had even Condi Rice getting into the act yesterday, and you know, now I think that explains why she took a hefty swipe at the Non-Aligned Movement. Obviously there is this very strong growing perception that India is not pulling its weight – it’s being intransigent and not taking the developing world with it. How are you going to alleviate these growing tensions in terms of you know, the perceptions which are building up in Washington that India is sort of being intransigent in terms of the Doha round?

Mr. Kamal Nath: I don’t think that’s the case . I do not know how the connection with the Non-Aligned Movement exists, but obviously India is a part of this grouping of the WTO. And the WTO position is on groupings. I don’t think there’s a question just to India. There is a question of addressing sensitivities. The United States has sensitivities; as I said in the USIBC , India has sensitivities. So there has to be mutual respect of sensitivities. India has unilaterally liberalized outside of the WTO – (inaudible). If you see industrial products – industrial products in India, today they have very low duties. So there is not a question of there being any tension. There is no tension. Of course we need to have a convergence of views – not just India and the United States. If we have a convergence, that doesn’t mean there’ll be a deal. The world is changed. If India, United States, Brazil and the European Union have a deal, this is no guarantee that there will be a deal. You have to have all countries on board, a large number of countries, addressing their concerns.

Q: You talked about investigating the sensitivities – I’m Shobana Chandra from Bloomberg. Post-Potsdam and up until yesterday or even today, have you been approached by any of the other two – say Europe or Brazil – on what we need to do now, because there are stories, at least here in the U.S. media, that there seems to be some kind of a rift between Brazil and India with Brazil now maybe leaning a little more toward the U.S. and EU. Is there concern that India might be on weaker ground because it will be the only one standing its ground?

Mr. Kamal Nath: I’ve heard this before. You know, I heard this before Potsdam, I heard this before Brussels of one leaning on the other. Let’s be clear that everybody is leaning on everybody, and that’s how negotiations are. I did talk to Amorim. I talked to Peter Mandelson this morning on the telephone. We have continuous dialogue with each other, because all of us want to find a way forward. So it’s not India being isolated or not isolated, this is a question really of all countries converging. I said if India settled with the United States, still there are differences between the United States and Brazil; there are differences between the United States and the European Union. There is no convergence between the United States and the European Union. Can the European Union and the United States stand up and say there’s convergence – there’s no divergence between them? They haven’t even agreed when it’s going to be the tariff cuts, though it has been agreed will be two thirds. Somebody says what’s your tariff cuts. I say, two third of what? We don’t know what, so that’s the point. So there is no convergence between the United States and the European Union also. So just kind of look at India and say this or Brazil and say this.

Mr. Rahul Chhabra : Yes, please.

Q: Jim Berger from Washington Trade Daily. Just sort of a follow up on that – as my understanding that the G4 process is dead and if so, what do you think can be accomplished within a multilateral context in Geneva between now and say the end of the year?

Mr. Kamal Nath: Well, I see the papers from the chairs of the Agricultural and Services committees coming, and I see discussions at the ministerial level. You must remember even the multilateral discussions – the multilateral process at Geneva, you really find an engagement that is intensive only of 30, 40, 50 countries. So , at the ambassadorial level, they are going to be discussing, seeing what the challenge papers are all about, and then trying to converge on the text. It’ll now be a text-based discussion, and after that, perhaps - you know Europe goes into vacation in August – but we hope that despite the vacation coming in the way, we will be able to continue with the momentum. The momentum is just not merely the G4. The multilateral process and the WTO process has a momentum of its own.

Q: I’m Jerry Hagstrom from National Journal. Over at Carnegie, you mentioned that the U.S. had wanted the right to continue subsidizing agriculture up to 17 billion a year, but was demanding very deep cuts in manufacturing tariffs. Can you tell me, in that debate, which is the bigger problem for you? The fact that the U.S. wants to continue subsidizing more in agriculture than it is currently paying out, or the deep cut that it wants in the manufacturing tariffs?

Mr. Kamal Nath: Well you’re comparing two different things. As I said in Carnegie, subsidies are distortions.Tariffs are not. So we need to correct subsidies, and while subsidies need to be collected, I don’t think there should be an exchange rate between correcting distortions and looking for tariff cuts. Where India is concerned is , we have low tariffs, so our position may be more flexible, but then we must go by groups – the group formations we have. That’s very important. And that’s what we’ll be doing. So I don’t think we can compare these two.United States must also be demonstrating its commitment. This round says effective cuts in trade distortion – that is the aim of this round. Effective tariff cuts does not mean the right to be able to increase your subsidies.

Q: One follow up – so would you expect the U.S. to cut its domestic agriculture subsidies below 10.8?

Mr. Kamal Nath: Well the G20 offer is at 12.1. That’s the G20 proposal of 12.1, and that’s where it stands at the moment. There was a big gap between 12.1 and 17. Now since the U.S. wants some headroom, there are countries that will say that if you want headroom in your distortions, we want headroom in our tariffs, you know? So you can’t have headroom for distortions without having headroom for tariffs. And market access of subsidized products is very different to market access for non-subsidized products.

Q: Sam Gilston with Washington Tariff & Trade Letter. After Potsdam, the U.S. and Europe clearly tried to paint India and Brazil as the bad guys at the meeting, and particularly claim that you were being recalcitrant and in NAMA negotiations and putting out new proposals. I was wondering if you could give us a clearer idea of what really is India offering in NAMA and are there specific areas where you would be able to give more to meet U.S. demands, or are there certain areas where you’re saying that you cannot because you have protected industries. Can you give us a better idea of what really you’re offering in NAMA?

Mr. Kamal Nath: Well, you really expect me to be negotiating through you?

Q: Yes, please do. (Laughter.)

Mr. Kamal Nath: What we’ve offered is what NAMA-11 has offered. And what it offered was based on what was on the table. Certainly all countries may have some flexibilities, but flexibilities are contingent upon other things. When you are negotiating in commerce, there is an exchange rate as I said in Carnegie if you were there. But when you are negotiating livelihood security, you’re not negotiating commerce. And in negotiating distortions, you’re not negotiating commerce.

Q: (Off mike).

Mr. Kamal Nath: No, it’s not collective. I’m saying as much as special products – if somebody is – (inaudible) – if somebody says I’ll agree to you on special products if you give me NAMA. So I said there’s no argument. NAMA has to be discussed as a stand-alone with market access, which we get, and I would like to see tariffs. If the United States starts with – say they come to a coefficient of five – I’ll be happy to come to a coefficient of 25.

The framework agreement talks of less than full reciprocity, and whatever the percentage cuts the developed countries take, I’ll take 10 percent less. But the way they want it is they want us to do double the cuts they’re doing. So I’ll happy to do 10 percent more cuts than what the developed countries want to do. If that’s acceptable to them, since you like to negotiate, let me send this offer to you.

Q: (Inaudible) – coefficient or on the tariffs?

Mr. Kamal Nath: On the tariffs. It talks about reduction commitments. Coefficient is only a means. So let’s not confuse coefficients and Swiss formula – you can call it a German formula for all I care. At the end of the day, the question is what is the reduction taking place? So if they reduce by 20, I’ll reduce by 10. If they reduce by 50, I’ll reduce by 40 – okay even 35 I may do it. But let them say what they’re willing to do. But they can’t say I’ll do 25 and you do 50. That’s all.

MR. : I’ll call them right now.

Mr. Kamal Nath: Yeah, you must call them. (Laughter.) We have a deal.

Q: Missy Ryan from Reuters. Just two quick questions. You mentioned at the Carnegie event something that a former USTR had said about the Doha round being launched on false pretenses because developing countries hadn’t bought into the development agenda. Do you believe that’s true, first of all? And secondly, Secretary Johanns, after the Potsdam meeting, brought up a consensus on food aid which he said was, you know, one of the bright spots of the meetings last week at Potsdam. Can you confirm that there was a consensus on food aid, and can you share any details of it?

Mr. Kamal Nath: There was consensus, I must recognize that. There wasn’t a breakdown everywhere – there was a consensus - on several things. There was consensus on food aid, there was consensus on some of the disciplines on export competition, and there was some – there was quite a lot of conceptual consensus on services. So there’s not a question that there’s no consensus, but there are headline issues. The headline issues are trade-distorting support, or TDS. Headline issues are product-specific caps. At the end of the day, every formula, every figure has to translate into something.

Now if you reduce your subsidies but do not have product-specific caps, it may be no good for Brazil. India does not have offensive interests in agriculture, but it may be really getting nothing to Brazil or maybe getting nothing to Argentina, or maybe getting nothing to many other countries. It may be getting nothing to Australia and Canada. Australia and Canada were very particular about – they talked to me. I flew into Potsdam from Canada. They were very particular about trade-distorting support because they themselves feel they are affected by it.

So it’s not that it’s only India and Brazil. There’s Australia and Canada, and the European Union who won’t want to do it until they find reciprocity by the United States. So it’s just not putting it simplistically that the U.S. won’t do it, so India’s not accepting. It’s not India. Please be clear. It’s other countries, which are equally concerned about it, and they are connected with it because what they want to do is commensurate with what the U.S. will do. There are – (inaudible) – very clearly that I will not do. I only do so much of my trade-distorting support if the United States does this, and so on and so forth.

Q: (Off mike.)

Mr. Kamal Nath: Well, those were her comments.

Q: Do you believe that?

Mr. Kamal Nath: Well, I don’t want to believe it, but so far – (chuckles) –

Q: (Off mike.)

Mr. Kamal Nath: Well there is, as I said – we need to be really comprehending the development – (audio break) – and the development content is really whether we are going to increase – how it’s going to help the economies of developing countries. Not by fancy studies which have no bearing to ground realities. There are a lot of studies that get thrown around which have no bearing to ground realities, and one of the studies says that subsidies are good for developing countries. If you open up markets of subsidized products –the consumer gets it really cheap. So you know, that’s another way of looking at it. It depends – studies of what perspective.

Mr. Rahul Chhabra : Last question.

Q: Mr. Minister, Raghubir Goyal from India Globe & Asia Today. Two quick questions, Mr. Minister – one, as far as Chinese goods are concerned and comparing with India, how do we stand as far as investors are concerned compared to investing in India and China? And second one is that the biggest question among Indian Americans here and also in India is the nuclear – civil-nuclear agreement, because when Indian Americans – (inaudible) – feel the heat there, and before investing they want to see this go through. What is the major hurdle, Mr. Minister, on what the Indian Americans can do as far as this deal is concerned, to go through? And millions of Indians are also waiting in India, and we’d like to see it go through.

Mr. Kamal Nath: We are committed to this agreement. Secretary of State Condoleezza Rice also expressed the same commitment yesterday in address to the USIBC. Of course there are certain things to be ironed out which the two governments are in the process – Ambassador is in discussion with them –both countries are pushing very hard. It’s a very earnest desire of both countries to see this happen, and we are optimistic. That’s all I can say on this. On the other hand, where China is concerned, investing in China and investing in India are two different things. Both countries have their own genius.

Q: Yesterday after the conference there were protests by Bhopal survivors for Justice. What is the government’s stand –

Mr. Kamal Nath: By who?

Q: By a group wanting justice for the Bhopal survivors. The gas tragedy?

Mr. Kamal Nath: Oh, the Bhopal survivors, yeah.

Q: Yeah. What is the government’s stand on Dow Chemicals investing in India right now, and also because there is a court case that’s asked them to pay a hundred – (inaudible). What is the government’s stand on this?

Mr. Kamal Nath: Well, the tragedy was in Union Carbide, and Dow, by integration, inherited Union Carbide. Dow themselves had no status in this, so Dow’s investment is not affected by that. Of course there’s a court case and the court procedure will continue, but we’d like to see this resolved. We’d like to see that this chapter is put behind us.