‘We all need to guard against protectionism’
Accompanying the US President Barack Obama is his commerce secretary Gary Locke. Tasked with promoting a “win-win, mutually-beneficial trade for companies for both countries”, Locke spoke to Hindustan Times. Excerpts:business Updated: Nov 08, 2010 21:07 IST
Accompanying the US President Barack Obama is his commerce secretary Gary Locke. Tasked with promoting a “win-win, mutually-beneficial trade for companies for both countries”, Locke spoke to Hindustan Times. Excerpts:
Why did it take a crisis so severe for the US to recognise India as its natural ally?
Much of the ground work for improved and strengthened relations between the US and India began during President (Bill) Clinton’s time, further enhanced by President (George) Bush and now brought to a higher a stronger level by President (Barack) Obama. We must not forget that Prime Minister (Manmohan) Singh came to the US a year ago. That was, in fact, the first official state visit hosted by President Obama.
But it is only now that India has got economic recognition. Would you say the crisis helped?
As the President has indicated, India is not an emerging country. India has arrived on the world stage. India is a major economic and strategic partner with the US on so many issues. American economic commentators have been talking about India’s growing role for many years, even before 2008. President Obama has long recognised the importance of India economically, culturally and strategically.
Is free trade a fair weather friend of the US?
Oh no. We all need to guard against protectionism. The President has spoken strongly against protectionist measures. If you engage in protectionism, it can easily lead to trade wars and in a trade war everybody loses. Many people complain about the ‘buy America’ provision for economic recovery. But that provision has many exceptions. In fact, under it, the US government can buy products from any country which is a signatory to WTO’s government procurement agreement.
What about increasing trade using currency wars?
The purpose of the actions of US Federal Reserve is not to devalue the currency, but pump more money into the system to stimulate the economy and provide for more investment. As Prime Minister Singh indicated today, it is in the interests of all economies to have the US economy grow at a robust level. That is the primary objective of the US Fed — to stimulate the US economy. When the US economy is more robust, it means consumers will buy more goods from all across the world.
But part of that $600 billion (R2,700,000 crore) package could create asset bubbles in countries like India.
I think everyone agrees that foreign direct investment (FDI) into India is beneficial to India. The infrastructure needs for India over the next few years is about a $1 trillion (R4,500,000 crore). That is way beyond the capability of your government and your private companies. So FDI is enabling that inflow of necessary funds to pay for all of these projects. If companies from around the world can bring their own money to India to pay for improvements of infrastructure from airports, to ports, to roads, that will enable your economy to grow, improve the standard of living and create jobs for the people of India.
On FDI, the US has been seeking the opening up of sectors like insurance and banking. But with a dismal regulatory track record and lawmakers not attempting reforms, how can a country like India, with so many poor people, be exposed to such dangerous practices?
Countries such as India can still impose the safeguards within which companies can operate. Each country needs to have adequate regulatory structures and mechanisms in place to ensure that whatever investments are made, are done in a safe and secure manner.
There is a perception that big business is the enemy of common people in the United States.
I don’t think I agree that all large corporations or businesses are insensitive to the needs of the people. I am very proud to say that so many US corporations working in other countries have a strong record of corporate social responsibility. After all, the investments and operations by US companies creates job opportunities in those countries. Many corporations also donate a lot of money to local programmes like education, job training and healthcare.