US mulls trade curbs over drug dispute
Feb 10 2014 , New Delhi
USTR likely to make announcement today
US trade representative Mike Froman, who has warned India of trade enforcement action, was expected to make an announcement in the early hours of Tuesday, Reuters reported. The move may deal a fresh blow to bilateral relations damaged in December by the arrest and strip-search of an Indian diplomat.
It was not clear till Monday night what sort of action the US trade representative could take. Washington has frequently threatened action but never made public the nature of such action.
“This is nothing but a pressure tactic. As the US is a big economy, they think they can arm-twist India to get concessions for entering into (India’s) expanding market, in manufacturing and retail,” Reuters quoted an Indian commerce ministry official as saying.
The prime minister’s office and the foreign ministry said the United States had not yet informed them.
Froman’s announcement came ahead of the US international trade commission’s scheduled hearings on Wednesday and Thursday to look into India’s trade and investment practices.
The US government has been under pressure from lawmakers and business groups, especially the pharmaceutical companies, to take tougher measures against India over alleged violation of intellectual property rights (IPR).
The US Chamber of Commerce recently asked the US trade representative to classify India as a ‘priority foreign country,’ a tag given to the worst IPR offenders. Such classification can trigger trade sanctions.
Indian pharmaceutical companies have been accused of violating IPR by producing cheap generic versions of medicines still under patent protection.
Other trade groups, including those representing the US pharmaceutical industry, have echoed the call for a tougher stance on India. India is on the US government’s priority watch list for countries whose practices on protecting IPR that Washington believes should be closely monitored.
USTR’s proposed move coincided with the USFDA commissioner Margaret Hamburg’s visit to India to strengthen cooperation between the FDA and its Indian regulatory counterparts.
During her meeting with Sharma on Monday, India talked tough and raised New Delhi’s concerns over FDA’s audit inspections of Indian drug companies and disproportionate penalties in certain cases. Sharma said the government would submit a discussion paper on the issue to the US.
“We are going to give a paper (to the US) on some of our concerns, when it comes to duration for the registration process for a filing,” Sharma said after the meeting. He indicated that Indian drugs were no way inferior.
The Obama administration and members of US Congress are pressing India to curb its generic medicine industry. The US pharmaceutical lobby has been vociferous ever since India and other developing countries succeeded in the WTO trade talks in Doha to address the issue of public health and availability of cheap life-saving medicines.
Low-cost generics from India have dramatically lowered medical costs in developing countries. It has also proved to be critical for the AIDS relief programmes. About 98 per cent of drugs purchased by the US AIDS relief programmes are generics from India.
Before Indian medicine companies rolled out generic versions priced at $1 a day, AIDS medication cost about $10,000 per persons per year. This has cut into US and EU drug companies’ profits and hence the strong protest from them.
This new standoff came at a time when US and India are trying to mend their strained relations after the Divya Kobragade incident in December. Indian diplomat Khobragade in the US was arrested and strip-searched after she was accused of a visa fraud and underpaying her maid.