Modi: Get on board the India train – Politico
With help from Doug Palmer and Adam Behsudi
MODI: GET ON BOARD THE INDIA TRAIN: Indian Prime Minister Narendra Modi urged U.S. investors Tuesday night to bet on his country’s future, telling corporate America the world’s largest democracy is moving ahead with business-friendly reforms.
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“This is a time when the world needs new engines of growth,” Modi said in a speech to the U.S.-India Business Council, taking a gibe at the slowing economy in China and lackluster growth in many other economies around the world. “From the point of view from the world’s oldest democracy, obviously it would be nice if the new engines are democratic engines.”
Modi, who will give a speech today to a joint session of Congress, said New Delhi is weeding out corruption, lowering barriers to defense trade and working to improve the investment climate and the ease of doing business on the huge subcontinent.
But in an apparent reference to recent U.S. hikes on H-1B visa fees that have hurt a number of Indian technology firms, the prime minister said India expects trade with the United States to be a two-way street. “It is very important for us that developed countries open their markets not only to goods from … India, but also to services,” Modi said.
IT’S WEDNESDAY, JUNE 8! Welcome to Morning Trade, where we would be remiss if we didn’t note Hillary Clinton’s historic (presumed) clinching of the Democratic nomination. The first woman to run for president shared a first name with your host and was considerably more colorful. Any other fun facts about women’s history? Let me know: email@example.com or @vtg2.
AMAZON TO INVEST $3 BILLION MORE: One true believer in India’s potential: Jeff Bezos, founder and CEO of Amazon, who announced plans Tuesday night to invest an additional $3 billion in their operations in the country on top of $2 billion in 2014. The company’s 45,000 employees in India have already made the country “the fastest-growing geography for Amazon,” Bezos said.
Altogether, USIBC member companies have invested at least $28 billion in the country since September 2014, with an additional $45 billion expected in the next two to three years, the group’s chairman, John Chambers, said, calling the projected figure a “conservative estimate.”
A DECADE LATER, CIVIL NUCLEAR AGREEMENT SEEING RESULTS: Steps taken by India to calm U.S. industry fears about nuclear power liability appear to be paying off. Westinghouse is expected to finalize contracts with the Nuclear Power Corporation of India to build six nuclear reactors by June 2017, the White House said in a joint fact sheet with the Indian government after Modi met with President Barack Obama.
The U.S.-India civil nuclear agreement, aimed at facilitating such deals, was signed in 2005 but was never fully implemented as U.S. companies feared they would be held fully liable in the event of a nuclear catastrophe.
India and the U.S. Export-Import Bank will work together toward a “competitive financing arrangement package for the project,” according to the fact sheet, which also notes the “start of preparatory work on site in India” for the six AP 1000 reactors. However, since the bank lacks a quorum, it cannot approve projects worth more than $10 million, creating one potential stumbling block.
But looking past that obstacle, Modi said the deal “will mark a new era” in U.S.-India nuclear and scientific cooperation. He also hailed a $2.5 billion contract GE signed last year to develop and supply 1,000 fuel-efficient locomotives to Indian Railways. “I expect many more such investments,” Modi said.
CHINA MAKES PLEDGES ON STEEL, NOT ALUMINUM: At this year’s U.S.-China Strategic & Economic Dialogue, Beijing was more receptive to U.S. overcapacity complaints on steel than it was for aluminum.
In a speech at the closing session in Beijing on Tuesday, Treasury Secretary Jack Lew said China had committed to reducing production over time by ensuring its central government would not “target the net expansion of steel capacity” and winding down “zombie enterprises,” which are companies that are propped up by the government despite being insolvent.
“While regrettably we were not able to come to common understanding of the global aluminum excess capacity situation, the United States and China will continue to hold discussions on excess capacity in this important sector,” he added.
The American Iron and Steel Institute welcomed the commitments, but AISI President Thomas Gibson added that they “will only be meaningful if they lead to real results that produce a significant net reduction in excess steel capacity in China.”
Other areas of progress were the bilateral investment treaty, international export credit financing guidelines, and financial reforms. Not so much on biotech. Click here to read the full fact sheet from the economic side of the talks.
USCBC AWAITS BIT OFFER: U.S.-China Business Council President John Frisbie said he was “pleased” that China’s updated BIT market access offer is expected next week, saying a “significantly reduced” list of carveouts will bode well for the talks. According to the fact sheet, both sides committed to update their offers by “mid-June.”
Frisbie similarly praised China’s statements that there is “no basis for sustained depreciation of the RMB exchange rate,” and predicted other issues were also being “teed up” for when Obama and Chinese President Xi Jinping meet in September at the G20 summit.
Frisbie added a plug for continuing the S&ED, a dialogue launched by the Obama administration and often criticized for not accomplishing enough. “[I]t is important to remember that the S&ED was established in recognition of the need to expand engagement to address the array of issues in the U.S.-China relationship,” he said. “In the next administration, the mechanisms for dialogue can be tweaked to make further improvements and become more effective, but high-level engagement is now mandatory in the U.S.-China relationship.”
RMB EASY AS 1-2-3: U.S. investors interested in China got some big news out of the S&ED, where Beijing announced that it would open a 250 billion renminbi Qualified Foreign Institutional Investor quota for the U.S., equivalent to roughly $38 billion. The quota allows U.S. investors who receive a special license to buy RMB-denominated shares in Chinese capital markets. It’s the largest quota extended to any economy besides Hong Kong.
China also committed to allow certain U.S.-based financial institutions to act as clearing houses for RMB, lowering the cost for processing trade and other transactions between the two countries.
“By clearing the way for U.S. institutional investors to participate directly in China’s capital markets and also accelerating the pace of liberalization of China’s currency, the announcement lays the foundation for expanded commercial activity along the U.S.-China trade and investment corridor,” Pat Burke, president and CEO of multinational banking and financial services company HSBC USA, said in a statement.
FINANCIAL FIRMS NOT GIVING UP ON TTIP REGULATORY COOPERATION: Business groups on both sides of the Atlantic have upped their lobbying for financial regulatory cooperation in TTIP by forming the Transatlantic Financial Regulatory Coherence Coalition. Right off the bat, the new coalition made clear that simply improving existing regulatory dialogues won’t satisfy them. It consists of 14 organizations from the U.S. and Europe, including the Securities Industry and Financial Markets Association, the European Services Forum and the U.S. Chamber of Commerce.
The United States has resisted the push, both by industry and the European Commission, to include financial regulatory cooperation as part of TTIP, which has led the EU to withhold a market access offer on financial services. In an effort to appease the EU, the Treasury Department has made a concerted effort to make the bilateral Financial Markets Regulatory Dialogue more fruitful. The coalition welcomed that move but argued “those efforts alone cannot deliver the benefits arising from a joint commitment to an agreed framework within TTIP.”
REICHERT SETS AG TRADE HEARING: It’s official: The House Ways and Means Trade Subcommittee will hold a hearing Tuesday on agricultural trade, although there’s still no word on whether anyone from the Obama administration will testify. Still, the hearing coincides with the USDA’s focus this month on the benefits of agricultural exports, including a post on Monday titled “22 Facts You May Not Have Known About Trade” and a recent column by Agriculture Secretary Tom Vilsack on TPP.
“In order for our economy and rural America to grow, the United States must maintain its status as the world’s largest agriculture exporter in the face of increasing competition worldwide,” Trade Subcommittee Chairman Dave Reichert said in a statement announcing the hearing that carefully avoided any direct mention of TPP.
PRITZKER: TPP HELP NEEDED: Commerce Secretary Penny Pritzker has become increasingly candid about the difficult task the administration faces to win approval of TPP, telling the American Association of Exporters and Importers that it can’t be done without their help. “If we are going to see TPP become law, we need you as our partners, making the case for trade in your communities, in your states, and nationwide,” she told the group Monday. “I urge you today to make your voices heard.”
COMMERCE OFFICIAL WOOS RV INDUSTRY: In that same vein, Deputy Commerce Secretary Bruce Andrews isn’t missing any opportunities to find TPP support wherever he can, making his latest pitch Tuesday at an event hosted by the Recreation Vehicle Industry Association during its annual fly-in to Washington this week.
“I know that RVIA has yet to decide whether to endorse the Trans-Pacific Partnership,” Andrews said in a speech. “So I want to take a moment to tell you why TPP is essential to this industry’s future.” TPP will eliminate RV tariffs in nine of the 11 other countries on Day One, and Vietnam and Malaysia will phase out those tariffs over time, he noted, adding that Commerce’s “Top Markets” report shows that Canada, Australia, Mexico and New Zealand have high demand for U.S. RVs.
RVIA executives told POLITICO at the event that the association hasn’t decided whether to take a position on the Asia-Pacific deal but would discuss that matter in the next couple of days ahead of its board meeting Thursday.
TOYOTA HIRES NEW GLOBAL POLICY DIRECTOR: A longtime U.S. Trade and Development Agency official was hired to lead Toyota’s international public policy duties from the company’s Washington, D.C., office. Leila Afas was named to the newly created position where she will coordinate work among Toyota and its global consulting firms, think tanks and other organizations dealing with geopolitical policy issues. The role will also assist government affairs operations in emerging markets in Southeast Asia and Latin America where the company has production facilities.
Japanese companies are rushing to gain market share in Cuba before the U.S. lifts sanctions on the communist nation, The Japan Times reports.
India will soon submit a formal proposal at the WTO for a trade facilitation agreement on services, according to The Hindu.
Sugar prices are at highest in nearly three years because of heavy rains in key Brazilian regions, Australian news outlet Farm Weekly reports.
Iran has started direct flights to Russia to boost trade, according to Sputnik International.
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